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What is Market With Protection?

This is an optional add-on protective feature to a Market Order. It allows a trader to set a price range within which the orders can get executed since trader is never sure of the buy / sell price in a market order.

Example

  • Scenario 1: Suppose you place a buy market order for 1,000 stock at the current market price of Rs. 20. Let’s understand how the orders will be filled up:
SL NO Quantity Price Total Buy Price
1 150 20 3000
2 100 20.20 2020
3 50 20.35 1017.5
4 75 20.60 1545
5 200 20.90 4180
6 100 21.20 2120
7 125 21.80 2725
8 200 22.20 4440
Total Quantity = 1000   Total Buy Amount = 21047.5

 

So,  Average Buy price             =          Total Buy price / Quantity

=          21047.5                          /                               1000

=          21.0475

 

  • Scenario 2: Suppose you place a buy market order for 1,000 stock at the current market price of Rs. 20 and place a Market-With-Protection @ 5%. So, here because of Market-With-Protection @ 5% of Rs. 20. The orders will stop getting executed after the price breaches Rs. 21 which is +5% of Rs. 20 [Rs. 20 + 1 (Rs. 20 * 0.05)]

 

Let’s understand how the orders will be filled up:

SL NO Quantity Price Total Buy Price
1 150 20 3000
2 100 20.20 2020
3 50 20.35 1017.5
4 75 20.60 1545
5 200 20.90 4180
Total Quantity = 575   Total Buy Amount = 11762.5

 

So here only 575 orders will be executed and the remaining 425 (1000 – 575) orders will be pending until the price comes at or below Rs. 21.