Greetings investors!

Hope you are enjoying the stock investing experience on Groww.  A few investors have brought to our notice that their orders are not getting executed even when the stock price matches the order price. There are several queries around this and in this blog, we will try to explain the possible reasons behind it. Read on!

Back To Basics : Order Types Available on Groww 

Before we begin, let me quickly take you through the order types available on Groww . 

Market Order : This is an instruction given to your stock broker to buy/sell stocks at their current market price.

Limit Order : In a limit order, you can specify the price at which you want to buy or sell a stock. This way your limit buy order can get executed at the limit buy price or a lower price (better buy price). Also, your limit sell order can get executed at the limit sell price or a higher price (better sell price).

Stop Loss Order : On top of your regular market orders and limit orders, a stop loss order can be placed. In a stop loss order, you define something known as a trigger price ( SL Trigger order) . Up until the trigger price is breached, the stop loss order remains in a different stop loss order book. After that, it gets converted into a regular market order or a limit order as specified by you. 

How Are These Orders Executed. 

It’s important to note that Groww is only an intermediary that places an order on your behalf on the exchange. Ultimately, it’s the exchange that sorts your orders and executes them. 

Now each order that is placed on the exchange, has a price and time – stamp attached to it. It is immediately queued in the exchange  “market book” based on  something known as ‘ price time priority’. 

How Are Orders Prioritised?

  • Best Price : If there are multiple bids placed, and there is one counter offer, then the execution will happen for whoever pays the best price. The highest bid will be matched against the lowest offer. 
  • Within Price, Time Priority : If multiple bids have been placed at the same price, then the order will be executed for the person who was first to place the bid. Hence, at times even when your order price matches the market price, your order might not get executed.

If a match is not found for the first order in the queue then the stock becomes “illiquid” i.e. there are no sellers for the stock at the best price that the buyers are ready to pay. Once a potential match becomes available, the stock becomes “liquid” again. 

Stock trading is a game of supply and demand. Now there could be scenarios where your stock hits lower circuit frequently ( sharp drop in price) but there are no buyers. This would compromise the liquidity of your shares. So even when you place a sell order, there would be no buyers and you wouldn’t be able to find a match. Similarly, for a very popular stock, there could be multiple bidders offering the best price but nobody may want to sell the shares. In both the cases, the order hierarchy and the principal of price time priority will be upheld. These could be some of the reasons why your order might fail or may not get executed. 

What is the Solution?

You can try placing a market or a limit order during a pre-market session ( between 9:00 AM and 9:15 AM) to push yourself ahead in the queue. However, despite this, there is no guarantee that your order will be executed, for the reasons explained above. 

Hope this was helpful!

Happy Investing!