In our last blog, we elaborated more about Trading Psychology. One of the common psychological pitfalls of trading is regret. As an investor you may not be able to sit hooked to your terminal 24*7. And you shouldn’t be! That’s why in this blog, we elaborate more on the GTT order, how to create GTT order, how to select the stock for placing a GTT order, and explain in detail about what a GTT order does. We also explain terms like limit order, stop loss, limit price, target price, trigger price and market price.
But, if you wanted to sell your stock today morning. It’s Monday and the last thing on your mind is to sell your stock. But, the absent-minded professor in you gets a wake up call at lunch around 1 PM and you decide to sell your stock that is falling down so that you will not incur any loss. At tea break, around 3 PM, you casually opened your stock app and Voila! The stock is back up again and you are left with nothing but regret!
This is where GTT comes into play! To simplify things, if it’s Hootsuite for Social Media Scheduling, JIIRA for tickets, Calendly for meetings, Timetable for students, it’s GTT for stocks.
GTT is used to plan, automate and schedule your trading better that buy and sell is passive. You needn’t remember anything and just let the algorithm do it’s thing.
We have already discussed about stop loss and limit orders that are capital preserving. GTT is an order that you can place in the stock market that enables you to trade passively by a predefined set of instructions.
What is GTT Order – Good Till Triggered Order?
An order that you can place and forget, and GTT does the rest!
GTT is a feature that allows you to set a trigger price.
If, Current Market Price Equals Trigger Price =>
Then, Buy/Sell the order.
If price is equal to the maximum price that is set as trigger price by you, buy is executed by the limit order.
If price is equal to the minimum price that is set as trigger price by you, the stock automatically gets sold by a limit order.
In a GTT, a limit order is placed on the stock exchange based on the limit price and predefined conditions that you set.
All you need to do to place a GTT is – define your buy or sell price; your target profit and the maximum loss you can incur and leave the rest to your order. As soon as each relevant price gets triggered, GTT order is placed.
An intraday GTT order is valid till the end of the day and a Futures & Options GTT order is valid till expiry. A Delivery GTT order is valid for a year. So you don’t need to place the GTT order every day. Just place the order, you do not have to remember about it from time to time, Forget and let the GTT order do the rest!
To place a GTT order, you need to have a Demat Account and may have to pay additional charges depending upon your broker.
In the Equity Cash segment on NSE and BSE, GTT can be placed only for Cash and Carry type orders and in the equity derivates segment on NSE, GTT can placed in the equity derivatives segment.
In short, A GTT is a trigger that places a limit order at the limit price chosen by you when the trigger price chosen by you is met or breached ( <= or >=).
This means, if the current market price of the stock has breached the trigger price, say Rs.200 , then a limit order for sell (A Sell GTT Order) is placed by the GTT at Rs.210, the limit price selected by you.
Here, you have set
The Trigger Price – Rs.200
Trade – Sell
Limit Price – Rs. 210.
If you placed this GTT order today and the stock rises to Rs.200 today itself and the limit price Rs. 210 is not exactly met on the same day, all such orders will be cancelled at the end of the trading day session.
A limit order only executes when the market price of the stock meets the order’s limit price.
The trigger set on GTT is valid only once. If the order is placed and is not executed or cancelled for any reason, the GTT order has to be replaced again.
This means, once the order is cancelled, you have to place a GTT order again.
If the Last Traded Price – LTP of a stock is higher than the selected trigger price, or if the Last Traded price opens up at a gap up or down breaching the selected trigger price, an order would be placed at the selected limited price.
This means if Last traded price is 210 Rs, Trigger Price is Rs.200, Limit price is Rs.205, sell order is placed at Rs.205.
Why place a GTT order?
To trade without stress at your own convenience!
There are many benefits when you use GTT, check them out here.
Time O Time!
Once you place a GTT order, you do not need to be hooked on to your monitor every second of your life. Just place a GTT order and YOLO!
Simple To Place
Placing a GTT order doesn’t involve any complex formulas or calculations.
You just have to decide whether you want to place a buy/sell order above, below or at the current market price. Fill in the Stop Loss and a Profit/Loss Target and place the GTT order.
GTT is that convenient personal assistant who would manage your chores. Instead, GTT manages your trades.
When you buy a stock, you usually do not place a sell order along with it. But with GTT, along with buy, you can place more than one sell orders based on predefined conditions set by you.
GTT allows you to preemptively place trades and track them passively.
What is Stop Loss?
The price below which you don’t want to sell. You set this price so that the order will sell if it ever reaches this price. This is a measure that you make to protect your capital. This order is called a Stop Loss order.
What is Target?
A target order is one in which you fill in the price at which you want to exit trading and make profits.
P.S: If you are keen on short-selling a stock, you can place buy orders with Stop Loss and Target as well.
Valid for a Long Time
As we already discussed,
GTT orders do not need be placed everyday. A GTT Intraday order is valid only for a single day. A GTT F&O order is valid till expiry and an Equity Delivery order is valid for 365 days.
There are two types of GTT Features:
A single trigger price is entered by you which may be used to trigger either a target order (if LTP > current market price) or a stop loss order (if LTP < current market price)
“OCO” – One cancels other:
This feature type is applicable for stocks which are already in your portfolio. In this type of GTT, you can enter 2 trigger prices. One trigger price would be above the current market price and will act as a target price & the other trigger price would be below the current market price and will act as a stop loss price.
Conclusively, A GTT is an efficient risk managing order with a long expiry that can be placed at the trader’s convenience.
What is a Limit Order?
By NSE, A limit order is an order that allows the price to be specified while entering the order into the system.
So what are you waiting for? Download StockPe and place limit orders and stop loss in StockPe tournaments. #PlaceKaroWinKaro
Stop Loss and Limit Orders are available on the new StockPe app, click the link below to download our new app.