A GTT order is one that remains active until the investor executes, cancels, or manually expires it. The order will be held in the market until a specific price or a trigger condition is met. The order is activated and executed once the trigger condition is met.
Assume an investor wants to buy a specific stock but only at a certain price. They can place a GTT buy order with a price trigger. The order will be active until the stock price reaches the trigger price, at which point it will be executed and the investor will receive the shares. If the stock price does not reach the trigger price, the order will remain active until canceled manually or expires.
GTT orders can be useful for investors who want to set up trades ahead of time but need more flexibility than a standard limit order.
Example of GTT order :
Suppose you want to buy shares of XYZ company, but only if the price drops to a certain level. You can set up a GTT buy order with a trigger price of Rs. 100 and a limit price of Rs. 98. This means that the order will be activated & executed only if the stock price drops to Rs. 100 or below. If the trigger condition is met, the order will be placed with a limit price of Rs. 98, which is the maximum price you are willing to pay for the shares.
If the stock price doesn't reach the trigger price of Rs. 100, the GTT order will remain active until it's either canceled or expires. This way, you don't have to keep monitoring/checking the stock price and can set up a buy order that suits your investment strategy and risk tolerance.
However, it's important to note that GTT orders are not available on all trading platforms, and they may come with additional fees. It's also important to understand the risks involved in trading in the stock market and to seek professional financial advice before making any investment decisions.
All about Zerodha GTT:
GTT is a feature introduced by Zerodha to offer a similar service like 'Good Till Cancelled' (GTC) order offered by most full-service brokers in India.
Zerodha offers Single Trigger and OCO Trigger Options:
Single Trigger : In the Single Trigger type, you must specify the trigger price as well as the order price for the required quantity. When the trigger price is reached, a single order is placed on the exchange. To enter new positions, the single trigger type is commonly used.
OCO Trigger : OCO is an abbreviation for One cancels the other. Set the stop-loss and target trigger price or percentage in the OCO trigger type. When either of the trigger conditions is met, the OCO is placed with the exchange. As the name implies, when one order is placed with the exchange based on one trigger condition, the other trigger condition is automatically canceled. The OCO trigger type is commonly used when you want to exit existing positions while limiting your losses.
Why Zerodha doesn't offer GTC orders?
GTC orders are valid until canceled. These orders are useful for investors who do not monitor the market on a daily basis. You could simply place an order with the target price and leave it there indefinitely with the GTC order. The order is executed when the prices match.
For example: suppose you want to buy 200 shares of Wipro Technologies. One option is to place a Limit order at Rs 200 every day. You can place this order once and forget about it thanks to the GTC feature. The order will be executed whenever the price reaches.
GTC orders are not supported by Indian stock exchanges. As a result; a broker who provides a GTC order must submit the pending GTC orders to the exchange every day in the morning. Orders that are not executed are canceled at the end of the day. Placing pending GTC orders every day creates technical challenges and raises the cost for the broker, who is limited to 400 messages per second per line.
Zerodha launched GTT orders for equity delivery traders (CNC orders) on July 26th, 2019. It's a great replacement for GTC orders, which are a critical trading feature for passive stock market investors.
While this is similar to GTC orders, it is not as convenient as GTC. There are numerous considerations to make when placing GTT orders with Zerodha. For more information, please see the Zerodha GTT limit section below.
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