Lesson 4 of 11 · Basics

Placing an Order

Market, limit, stop-loss — which order type to use and when.

Three order types you must know

1. Market Order

You say: "Buy now, whatever the price." The exchange matches you instantly with the best available seller. You're guaranteed to get filled, but the exact price can be slightly different from what you saw (especially in fast-moving markets).

When to use

When you need to enter or exit RIGHT NOW and price precision is less important. Common for large-cap stocks with good liquidity (NIFTY 50 constituents).

2. Limit Order

You say: "Buy ONLY at ₹500 or lower." If the stock never reaches ₹500, your order stays pending. You control the price but not whether it gets filled.

When to use

When you have a specific price in mind — entering a dip, exiting at a target. Most systematic strategies use limits to avoid overpaying.

3. Stop-Loss (SL) Order

You say: "If the stock falls to ₹480, sell it automatically." This protects you from a big loss — once the trigger price is hit, the order activates. You can also combine it: a SL-Limit triggers a limit order at your stop price, or a SL-Market triggers a market order (fills faster but price may slip).

The most important order for risk management

Never enter a trade without knowing where your stop-loss is. Professionals lose on individual trades — they survive because they cut losses before they compound.

Intraday vs Delivery

Type	What it means	Settled by
MIS (Intraday)	Buy and sell the SAME day	Auto-squared at 3:20 PM
CNC (Delivery)	Hold overnight or longer	T+1 (shares arrive next day)
NRML (F&O)	Futures & Options positions	Per contract terms

Zerodha, Upstox, and most brokers show these labels. CNC is for buying stocks to hold. MIS is for intraday speculation.

A simple example

Historical scenario — HDFC Bank, March 2024

Suppose you decided (historically) to buy HDFC Bank around ₹1,450 with a stop at ₹1,420 and a target of ₹1,500 — that's a 1:1.67 risk-reward.

You'd place:
• Limit buy at ₹1,450 (enter only if price comes down to your level)
• SL order at ₹1,420 (auto-exits if it goes against you)
• Limit sell at ₹1,500 (locks in profit at target)

This is the basic three-legged trade structure every systematic strategy uses.

The 3-point trade structure — every systematic trade has these

Key Takeaways

Market order = fill now, price varies. Limit order = fill at your price or better.
Stop-loss is not optional — it's how you protect your capital.
CNC = hold overnight. MIS = intraday only (auto-exits at 3:20 PM).
Every trade needs three things before you enter: entry price, stop-loss, target.

Previous Next