How many GTT orders are permitted on a single account?
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As per the SEBI guidelines, a single account can place a maximum of 50 GTT orders.
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If you are into investing in the stock market, you must get familiarised with the concept of GTT, which refers to the Good Till Triggered order. The GTT allows investors to place orders to buy or sell a security at a predetermined price. It eases the cumbersome process of monitoring the prices on a daily basis.
However, you must be aware that there are several situations which can cause GTT order rejection, cancellation, or simply it is not triggered. Before going into the concept of why isn’t the GTT order triggered, let’s understand the concept of GTT in detail.
GTT is a trader-friendly sale and purchase mechanism that protects the trader or investor from wasting time in monitoring the prices of a security on a daily basis. The GTT order is based on the concept of trigger mechanism and the order is effective when the preset condition is met. The order remains valid till it is executed or cancelled within a year’s period.
The GTT order allows the trader or investor to place a buy or sell order for a security when its price reaches a particular point. When the price reaches the preset point, the order is triggered and the trade is automatically carried out. The GTT order mechanism greatly eases the trading by removing the hassle of regular monitoring and also allowing the investor to gain by even small or minor changes in the price.
A better way to understand the concept of GTT is by way of an example. Let us assume an investor X wants to sell a stock, which he purchased at Rs 100, for Rs 101 allowing a profit of Rs 1 per stock. The investor X sets the GTT order at Rs 101, which will then get triggered when the stock hits that price mark. By placing the GTT order, the investor X will not be required to monitor the price movement of this particular stock and he will not miss the opportunity to trade as the order will be automatically executed.
The GTT order comes with great advantages and benefits for investors who are specific and focussed about their investment objectives. Among the key benefits of GTT which make it enticing for investors is that these orders have a long validity, so there is no need to renew the order after quick successions.
By placing the GTT orders, investors are also able to save a lot of their time, as there is no need to monitor the prices. The investors can then utilise this time in other activities, whether it be research of stocks or investing, or relaxing.
A GTT order is a great feature in the hands of an investor who is clear about his or her investment objectives. The addition of automation that GTT brings to the table is also a great tool in the hands of the investors who want to make profit from small changes in the price and who do not want to spend time monitoring the stocks.
So, the GTT order can be used by investors who have a clarity about the buying or selling price of securities. It means even the small price movement, which can otherwise be missed in manual monitoring, can be seized with the help of a GTT order.
While investors with short-term investment goals can use GTT order to seize small fluctuations in price, such orders can also be used by investors with long-term investment goals who do not want to keep a regular eye on the market.
If you want to avoid GTT order rejection, you must be careful in following the processes and be meticulous about the requirements. The order’s trigger price should align with the valid price range, so you must avoid invalid price ranges. Also, before finalising the order, you must make sure you have got all the details right. In case of frequent modifications to the order, there is a possibility of your GTT order rejection.
Now that you know in detail about the GTT orders and GTT orders are triggered, you must also be aware of the reasons which can cause your GTT order to not trigger. Here is the list of reasons:
Insufficient Shares and Funds
To get your GTT order triggered, it is important that there are sufficient shares in case of sell order, and sufficient funds in case of the buy order. In case there are insufficient shares and funds in your account, your GTT order will be rejected. The lesson here is that you must always keep an eye on your demat account and ensure there are sufficient holdings in there.
Time Lapse
GTT orders come with time validity and are executable only till a particular time, that is, one year. In case the preset price mark for the buy or sell is not reached within this time frame, the order stands canceled and will not be triggered. To get the GTT order triggered, it is important that the preset price mark is reached within the particular time frame.
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As per the SEBI guidelines, a single account can place a maximum of 50 GTT orders.
Your GTT order could have been rejected for any of various reasons, including setting the trigger price outside the valid price range, insufficient funds or shares in your account, or expiry of time validity.
A trader can place a GTT order at any time of the day. Also, the GTT order can be modified at any time of the day.
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