Order types on PSX: market, limit and stop-loss, explained with examples
How market, limit and stop-loss orders work on the Pakistan Stock Exchange, with worked examples. Why a market order can be rejected when you seem to have enough money, and how FIFO decides the tax when you sell.
By the Nafa team · Updated · 5 min read
When you buy or sell a share you place an order. There are three kinds you will actually use. Here is each one, with numbers.
Market order
"Buy or sell now, at the best price available." You choose how many shares, not the price.
Example. KEL trades at Rs 5. You place a market order for 100 shares. It fills straight away, perhaps 60 shares at Rs 5.00 and 40 at Rs 5.02.
Why a market order can be rejected when you seem to have enough
You have Rs 500. A share is priced at Rs 249. You try to buy two, which comes to Rs 498, but the order is rejected.
The reason: for a market buy, the exchange doesn't check your money against the Rs 249 you see. It checks it against the upper cap, the highest price the share is allowed to reach that day (say Rs 273).
| Amount | |
|---|---|
| What you expected (2 × Rs 249) | Rs 498 |
| What the exchange checks (2 × Rs 273) | Rs 546 |
| Your balance | Rs 500 |
| Result | Rejected |
Being checked at the cap doesn't mean you pay the cap. The order still fills near Rs 249. The cap is only there to make sure you could cover the worst case. To get round it, buy one share, add a little money, or use a limit order, which is checked against your own price.
Limit order
"Buy only at my price or lower", or for a sale, "sell only at my price or higher." You set the price, and the trade happens only if the market reaches it.
Example. KEL trades at Rs 5, but you only want it at Rs 4.50. You place a limit buy at Rs 4.50. It fills only if KEL falls to Rs 4.50 or below. If it never does, you simply don't buy.
A limit order is checked against your price (Rs 4.50), not the cap, so it isn't rejected the way the market order above was.
Stop-loss order
A conditional order, mostly used to limit a loss. You set two prices:
- Trigger price: the level that switches the order on.
- Order price: the price the order is placed at once it is switched on.
Selling to limit a loss. You bought KEL at Rs 5. You set a trigger at Rs 4.50 and a sell price at Rs 4.45. Nothing happens while KEL stays above Rs 4.50. When it touches Rs 4.50, a sell order at Rs 4.45 goes out, so you are out before the loss grows. The sell price sits a little below the trigger so the order still fills while the price is falling.
Buying on the way up. You only want KEL if it breaks above Rs 5.50. You set a trigger at Rs 5.50 and a buy price at Rs 5.55, a little above the trigger so it still fills while the price is rising. When KEL touches Rs 5.50, the buy order goes out.
The rule: for a sell, the order price sits a little below the trigger; for a buy, a little above.
Stop orders are usually run by the broker's system rather than by the exchange itself, so which ones are offered, and how, differs between apps.
When you sell, FIFO decides your tax
When you sell, NCCPL, which collects the tax, works out your capital gains tax on a first in, first out basis. Your oldest shares count as sold first, whichever ones you have in mind.
Example. You hold KEL:
- You buy 100 shares at Rs 4.
- Later you buy 10 more at Rs 5.
- Then you sell 10 at Rs 6.
You might think you sold the newer Rs 5 shares, for a profit of Rs 1 each. FIFO counts them from the first batch at Rs 4 instead:
| Per share | 10 shares | |
|---|---|---|
| Sold at | Rs 6 | Rs 60 |
| Cost counted (oldest batch) | Rs 4 | Rs 40 |
| Taxable profit | Rs 2 | Rs 20 |
So the tax is worked out on Rs 20, not Rs 10. You can't choose which shares you are selling: the oldest always go first.
Capital gains tax is deducted automatically when you sell. The rate depends on whether you are a tax filer and is set in each year's budget. A sale at a loss carries no capital gains tax.
Quick recap
| Order | You get | You give up | Suits |
|---|---|---|---|
| Market | Speed and an almost certain fill | Control over the price | Quick trades |
| Limit | Your exact price | A guaranteed fill | Trades where the price matters most |
| Stop-loss | An automatic exit or entry | It may fill a little away from the trigger | Limiting losses |
Two things to remember: the cap price is a ceiling the exchange checks, not what you pay, and when you sell, your oldest shares go first for tax.
Related guides
- PSX trading fees and charges: what each trade costs on top of the share price
- How to open a Nafa account
- Every PSX stock, with its price, chart and financial results
