Lesson 12 : The Hidden Rule of Trading Success: Use the Right Order, Not Just the Right Stock

🟦 1. What is an “Order” in Stock Market?

When you buy or sell shares, you don’t directly interact with the stock exchange.
You give instructions to your broker.

Those instructions are called Orders.

An order tells:

• What you want to buy or sell
• In what quantity
• At what price
• Under which conditions

So an order is not just “Buy / Sell” —
an order contains your trading plan.

A smart trader asks:

“How do I want my trade to be executed?”

A careless trader just presses BUY or SELL without thinking.

Order types exist to give traders:

• Control
• Protection
• Planning
• Discipline

Now let’s understand each type one by one.

🌍 2.1 Market Order — BUY

When you place a Market Buy Order, the broker buys the shares at the best available price in the market at that moment.

Example:
Current price shown = ₹100
You place Market Buy
Your order may execute at:

• ₹100.05
• ₹100.20
• ₹99.90
• depending on moment-to-moment fluctuation. This price difference is called Slippage.

🔻 2.2 Market Order — SELL

When selling at market price, shares are sold instantly to the best available buyer.

Example:
Displayed price = ₹250
Market Sell executes at:

• ₹249.70
• ₹250.10
• ₹249.20

So selling instantly may give slightly better or worse price.

🟩 Example (Realistic)

Rohit sees a stock suddenly rising. Without thinking, he places Market Buy at ₹850.
But the price was jumping fast.
He gets execution at ₹860 — ₹10 more than expected.

Rohit felt “I entered late”.
But the real reason was — wrong order type.

📌 When to use Market Order

• For long-term investment
• For exiting urgently
• For highly liquid large-cap stocks

❌ When NOT to use Market Order

• In volatile stocks
• In opening market (9:15 to 9:20)
• In low-volume / penny stocks

🟧 3. Limit Order

🔼 3.1 Limit Order — BUY

Example:
Current price is ₹120
You want to buy only at ₹115
So you place:
Buy Limit Order = ₹115

If stock comes down to ₹115 → Order executes
If stock stays above ₹115 → Order remains pending

🔽 3.2 Limit Order — SELL

Example:
You bought a share at ₹500
You want to book profit at ₹540
So you place:
Sell Limit Order = ₹540

If price rises to ₹540 → order executes
If price stays below → no execution

🟧 Example (Scenario)

Meera knows a good stock trades between ₹300–₹310.
She doesn’t want to chase price, so she places:
Buy Limit Order: ₹303

Price falls → her order executes → she gets perfect entry
Later stock jumps to ₹335 → Meera books profit calmly.

Her entry was smart because she controlled the price using Limit Order.

📌 When to use Limit Order

• For planned buying
• For target selling
• For disciplined trading without emotions

Limit Order teaches one important trading skill — patience over excitement.

🟨 4. GTT Order — Good Till Triggered

✳ Meaning

A GTT order allows you to set Entry, Target, and Stop-Loss all together.
And it remains active for up to 1 year.

You don’t have to watch the market.

🟨 Example (Perfect Use Case)

Stock price today = ₹100
You want to:

• Buy only at ₹95
• Book profit at ₹118
• Protect yourself at ₹90

So you place GTT:
Entry Trigger = 95
Target = 118
Stop-Loss = 90

You close the laptop → GTT waits for opportunity → executes without emotions.

💭 Why GTT is revolutionary

• No screen time required
• No emotional trading
• Helps working professionals & students
• Fully systematic trading

🟨 When GTT becomes a superpower

• When you fear overtrading
• When you do revenge trading after loss
• When you suddenly change target due to greed

GTT makes you behave like a disciplined investor, even when emotions are strong.

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🟥 5. Stop-Loss — The Lifeguard of Trading

✳ Meaning

A Stop-Loss is a condition that automatically exits the trade to prevent big loss.

Example:
Buy at ₹250
Stop-Loss set at ₹242
If stock falls to ₹242 → system sells automatically → heavy loss prevented.

💡 Why Stop-Loss is Important

Because humans are emotional.

When trade goes in loss:

• Beginners think “it will come back”
• Professionals know “loss must be limited”

Stop-loss protects your capital, confidence, and mindset.

🟪 Pros & Cons of Stop-Loss

A stop-loss is like a seat belt.
You don’t drive expecting an accident —
but if something unexpected happens, you’ll survive.

🟦 How Stop-Loss Benefits Traders

Professional traders never worry about losing trades because:

• Their Stop-Loss decides the loss
• Their strategy decides the profit

The goal is not to win every trade —
The goal is to protect capital until the winning trade arrives.

🔥 Putting It Together — How Pros Use All Four

A professional trader does NOT choose random order types.

Their flow looks like this:
1️⃣ Limit Order for perfect entry
2️⃣ Stop-Loss set immediately
3️⃣ Target defined using Limit Order or GTT
4️⃣ If busy or long-term → use GTT (Entry + Target + SL)
5️⃣ Market Order only for urgent exit

So order type is not a button —
Order type is a strategy for survival and growth.

🧠 Final Practical Example (Full Journey)

Rakesh used to trade without stop-loss and lose money.
After training, he started using order types smartly.

Stock current price = ₹725
He wants to buy only at ₹712
So he placed:
Buy Limit Order = ₹712

Price came → entry executed
Immediately he set:
Stop-Loss = ₹699
Target = ₹752

After 6 days → stock hit ₹752 → target achieved 🎉
He did nothing… because his order types worked for him.

He didn’t chase the stock.
The stock came to him.

🌟 Coming Up in Lesson 13: Intraday vs Delivery

Learning Outcome: Difference between short-term (intraday) and long-term (delivery) trading.
Key Takeaway: Intraday is high-risk for quick profits, delivery is safest for long-term wealth building.