What are the different order types available on Zerodha and how are they executed?
An order type signifies the nature of instruction you give to your stockbroker to execute your transaction. The following order types are available on Kite:
- Market - A market order is an order to buy or sell scrips at the current best available price.
- Limit - A limit order is an order to buy or sell scrips at a specified price. When you are buying, you instruct your broker not to go higher than the specified price. And when you are selling you instruct your broker not to sell below your specified price.
- Stoploss limit (SL) & market (SL-M) - A stop-loss order remains passively in the exchange's stop-loss order book until your defined trigger price is breached. Once the trigger is breached, the order works exactly like a limit (SL) or market (SL-M) order.
You may use the GTT or AMO feature in combination with the above order types. Depending on the availability of buyers/sellers, the market order type is most likely to execute since it has the least number of conditions to fulfil.
Which order type best ensures execution?
When you place an order during normal market hours , order matching on the exchange happens on a price-time priority . This means orders get executed on a 'first come first serve' basis (queue system).
If there are people who have placed orders before you, your order will be executed only if the orders placed earlier gets filled. Orders may be difficult to execute if you're trading stocks that have hit the circuit limits or are illiquid.
To be ahead of the queue, you can -
1. Place an AMO - Limit/Market order after 3:45 PM. (Market orders have a higher chance of being filled)
2. Place a market or limit order at the pre-market i.e at 9:00 AM
Placing a pre-market order has a better chance of being executed than an AMO. But placing an AMO is more convenient as you can place it anytime between 3:45 PM to 8:57 AM for NSE & 3:45 PM to 8:59 AM for BSE and not wait for the pre-market timings.
In spite of placing an AMO or pre-market order, there is no guarantee that your order will get executed. This is the same across all brokers.