What is a Smart Limit Order?

What is a Smart Limit Order?

A Smart Limit Order is an advanced type of limit order that allows users to set custom expiry times and actions, ensuring the expected execution of the order. It includes features like Market Protection Price (MPP) to safeguard against undesirable execution prices. There are two types of Smart Limit Orders:

  1. Convert to Market: This type of Smart Limit Order converts the limit order to a market order at the specified expiry time, ensuring the order is executed at the best available price in the market.

  2. Cancel the Order: This type cancels the limit order at the specified expiry time if it has not been executed, preventing any unwanted executions after the expiry time.

The condition is similar to a regular limit order, where you buy below the Last Traded Price (LTP) and sell above the LTP. If you wish to buy above the LTP or sell below the LTP, you need to place a Smart Limit Order (Trigger).

Example:

Suppose you want to buy 1000 shares of XYZ Company at a limit price of ₹100 per share. You set a Smart Limit Order with the following details:

  • Quantity: 1000 shares

  • ​Limit Price: ₹100

  • Expiry Time: 3:00 PM

  • Action at End Time: Convert to Market

  • MPP: 3%

At 3:00 PM, if your order hasn't been executed at or below ₹100, it will automatically convert to a market order and be executed at the best available price. The Market Price Protection ensures the execution price does not exceed ₹103(which is 3% above ₹100).

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