Market order is a type of order where one wishes to buy or sell scrip immediately at best available current market price. In Market Order execution of order is guaranteed (provided enough depth is available) but the execution price may vary.
The biggest risk of market orders is the execution at the desired price is not guaranteed. Stock prices change every second. In a market order, one can get desired quantity but price can move and sometimes that’s disadvantage.
In order to protect you from this disadvantage, we let you decide the market protection percentage at the time of entering market order. In this type of market order, an order gets canceled and is re-submitted as a limit order if the price of the scrip moves drastically in an adverse direction after the order has been placed. You have the ability to decide the percentage of market protection you want for your orders.
For example, if you choose to place a buy market order, whenever you open the “BUY” order window and choose “Market”, the “Market Protection” field is activated. As you can see below in the image, it’s at 3%. You can either decrease or increase this. What this does is that if you place a market order of quantity 1000 at CMP 100, if only 50% quantity i.e. 500 shares of your order is executed and then there is sudden volatility in the market and the market price suddenly moves above 103, the rest of your order will not be executed at this price of 103 as you had entered a market protection of 3%. It will send the order for remaining quantity as a Limit order but 3% away from your executed price. So, if your executed price is 100 then limit order at price of 103 will be placed for remaining quantity. This way you are protected from the risk of sudden volatility in the market. If you do not want any market protection for your order, you can input 0 in the “Mkt Prot” field and this ensures that there is no market protection percentage set for your market order.
As the name suggests, its a protective feature to prevent freak trades which ensures that the order is not filled at an absurd price from the prevailing market price.
Additional Reference Links
- Order Types in Stock Markets
- Market Orders
- Limit Orders
- Stop Loss Limit Orders
- Stop Loss Market Orders