NISM Certifications · NISM-Series-VIII: Equity Derivatives · Trading Mechanism
In the NSE derivatives trading system, which type of order is held in the system and becomes active only when the market price reaches a specified trigger price?
A stop loss order is the order type that remains inactive until the market price reaches the trigger price set by the trader. Once triggered, it enters the order book for execution. Other order types such as IOC, day and market orders do not depend on a trigger.
- AStop loss orderCorrect
- BImmediate or Cancel order
- CDay order
- DMarket order
Explanation
A stop loss order stays dormant in the system until the last traded price touches the trigger price, after which it enters the order book as a market or limit order. An IOC order is executed immediately or cancelled, a day order is valid for the day, and a market order executes at once at the best available price.
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