Understanding GTT OCO for beginner

General
1

Hi,

I am new to ‘actual’ stock trading & I am a bit confused about GTT OCO triggers. Kindly let me know if my understanding is correct with regards to each of the following points.

Lets say I want to buy (CNC) a stock which is currently trading at Rs. 300

  1. If I do - CNC BUY LIMIT - at 200,
    does it mean that whenever the stock price is AT-OR-BELOW 200, my buy order will be placed & executed?

  2. If I do - CNC SELL LIMIT - at 400, (assuming I already have shares in demat)
    does it mean that whenever the stock price is AT-OR-ABOVE 400, my sell order will be placed & executed?

Now, for GTT OCO SELL (CNC),
lets say I have the shares in my Demat a/c bought at 200 and the current price is 250.

If I set the following GTT OCO SELL (CNC) triggers, (after pre-authorizing sell transaction)

Target Trigger = 330
Target Limit = 350

Stop Loss Trigger = 120
Stop Loss Limit = 100

  1. Does this mean that my ‘Target’ order will be placed after the stock price breaches 330 in the upward direction?

  2. And will it be executed between 330 & 350 or will it be executed AT-OR-ABOVE 350 ?

  3. Does this also mean that my ‘Stop Loss’ order will be placed after the stock price breaches 120 in the downward direction?

  4. And will it be executed between 120 & 100 or will it be executed AT-OR-BELOW 100 ?

  5. Lastly, if I buy (CNC) shares on T day then what is the earliest that I can set the GTT OCO SELL (CNC) triggers without any risks or downsides? Should I wait for the shares to reflect in CDSL demat account?

Thank you!

2

CNC buying or selling limit orders are for the session only.

CNC with GTT means, there will be triggers for both buying and selling.

For example, the CMP of a share is 100, and you want to buy at 95

You place a GTT for buy price of 95 and trigger at 94, so when price touches 94, you will buy at 95. Trigger price should be less than your price.

You already have shares bought at 100, CMP 101, and now you want to sell

You place a GTT for selling at 105 and trigger at 106, so when price touches 106, you will sell at 105. Trigger price should be more than your sell price.

So essentially with GTT, you are buying a little higher than the CMP, and you are selling a little lower than the CMP.

You can use decimals too with your prices.

CMP 100, buy price 95, trigger at 94.90

CMP 101, sell price 105, trigger at 105.10

And you can sell the very next day with GTT too, just like a BTST, and I think in these BTST with or without GTT, there is always a chance of short delivery.

3

one can also place trigger price at 104 .9and limit price at 105 , so that our sell order will be executed earlier than placing trigger price at 106 and limit at 105 , but not 100 % confirmed execution will be even though 10 paise difference , have to check and place again the same order if not 105 touched that day .

Also another choice can create AMO Limit order in basket and place after market daily ,( if have time ), in this sell order one advantage is if freak trades happens this sell or buy order will be executed in seconds and will come to same price , but in GTT these trades wont be executed , but only for this type of freak trades especially in opening 1 min candle at 9.15 am or at some volatile times between mkt hours , all other GTT orders will be fine.

But for this AMO buy orders have to allocate fund but not in GTT case .

4

Yes, if we want 100% fulfillment, then we have to buy for a little high than the CMP and sell at a little low than the CMP.

1 Like
5
  1. Correct but the regular buy order will be cancelled by Exchange at the end of the trading day if it is not filled.
  1. Correct, same “but” as 1st answer
  1. Correct (order is placed, not necessarily executed). Refer to 4th answer.
  1. Sell target limit order will be executed at or above 350 only (same “but” as 1st answer during the triggered day)
  1. If target trigger hits, the stop loss in the GTT is auto-cancelled (even if the target order is not executed). Otherwise, correct (order is placed)
  1. The SL order would be executed instantly at a market price up to 100 as limit price protection (meaning order will not be executed if the price jumped from 121 to 99 or below* in a milliseconds - insufficient buyers to match with your sell price).

*Practically impossible :slight_smile:

  1. To avoid the risk of BTST, you can place sell OCO GTT order on T+2 days or later. However, if your target and stop loss is far away like more than 40%, I don’t see any risk in placing sell OCO GTT order on the same day you buy the shares.

If you have understood the working mechanism of GTT correctly, then you would set the sell trigger price higher than the limit price (or limit price lower than the trigger price) for both target and stop loss, so that once the trigger price breached, the order would be executed at the market price with the protection of limit price. The wider, the better chance of execution instantly once triggered.

1 Like
6

@Aoz
Thank you for taking out time to lucidly explain this. Please bear with me. So, a Sell order will be executed if the CMP is greater than or equal to the ‘Target Limit’ (Your reply No. 3 & 4), right? This is as it should be & I understood it.

BUT (in case of Stop Loss Trigger being activated) a Sell order will only be executed if the CMP is greater or equal to ‘Stop Loss Limit’ ? This is slightly confusing because what I thought (maybe incorrectly) was that once the Stop Loss Trigger is activated, the sell order goes to the Exchange but it is executed only when the CMP is AT-OR-BELOW the Stop Loss Limit. (This is also what some youtube “Gurus” said in their GTT explanation videos.)

If I am correctly interpreting your reply to Point 6, then as far as Stop Loss in GTT OCO is concerned, it is the ‘Stop Loss Trigger’ which is the controlling factor. Once it is activated, the ‘Stop Loss Limit’ becomes irrelevant. So, in my example, if my intention is to Sell once the CMP falls to 100 or below, then I should do something like this…

SL-Trigger = 100
SL-Limit = 80 or anything far below 100

Is this correct?

7

Did you see my reply, did it answer any questions? :roll_eyes:

8

@GB26

Thank you for your reply. And yes it did. I am just trying to reconcile the conflicting information I gathered outside of this forum. Hence, I tried to understand it with an example divided in points.

1 Like
9

It is a straight forward feature, I use it for both TP and SL.

What is the single point that you want to be clear about?

10

@GB26
If you do not mind, please go through the response of Aoz & my reply-question to it.

11

I would have, if I had not been using the feature.

Or perhaps there is more to the feature than what I know :thinking:

12

Yes, your understanding is correct. The concept of “limit” order is that you command the order to be executed at or better price.

For sell, the higher the better. If CMP is higher than limit price, it would be executed at market price (i.e. best available price up to limit price).

Correct, it’s how it should be.

The sell SL limit order (post-trigger) should be executed when CMP is at or above the stop loss limit. That’s the whole concept of limit order.

Maybe you could revisit the video you’re referring to.

Sounds irrelevant I agree but the way how GTT system works, it is “limit order” that is relevant.

GTT is basically an internal feature sitting at broker’s server if I phrase it right. Once SL triggered (trigger price hits), the limit order with price 100 is sent to Exchange for execution. If at that time, CMP is 119/120/121, the sell limit order would be executed around those prices (best available) since you’re commanding the order to be executed at or better than 100 when there’s match available.

You got it right. :slight_smile:

1 Like
13

@Arjun_Oberoi

Thank you very much for quoting & replying in sections. The highlight of your response is,

"The concept of “limit” order is that you command the order to be executed at or better price.

For sell, the higher the better."

For sell, any ‘Limit’ parameter means at or higher.

For buy, any ‘Limit’ parameter means at or lower.

Very succinct. Thanks!