Hello Traders,
Have you ever tried to place a market order for a quick entry or exit, only to have it rejected by the exchange? It’s a common frustration, especially when trading stock options where market orders are often restricted.
To solve this, we introduced Market Price Protection (MPP), and today we want to do a deep dive into how it works, how it compares to a standard market order, and how our new transparency feature helps you make more informed decisions.
What is a Market Order?
A market order is the simplest way to trade. It tells the exchange to buy or sell a security at the best available price immediately.
- Best for: High-speed execution in highly liquid stocks.
- Potential downside: In volatile markets, the price you get might be different from the price you saw when you placed the order (this is called slippage). For certain instruments, like stock options, exchanges will reject these orders outright.
What is a Market Price Protection (MPP) Order?
Think of MPP as a smarter version of a market order, designed to improve your execution success. When you place an order that would normally be rejected (like a market order in stock options), our system automatically applies MPP.
Instead of sending a pure market order, we convert it into a limit order with a small, calculated price range. This does two things:
- Reduces Rejections: It satisfies exchange rules that require a price limit, meaning your order is much more likely to be accepted.
- Protects Against Slippage: It provides a safety buffer, protecting you from executing at a wildly different price during a sudden market swing.
Here’s a quick comparison:
| Feature | Market Order | MPP Order |
|---|---|---|
| Primary Goal | Speed of execution | Certainty of execution & avoiding rejection |
| Best Use Case | Liquid equities | Stock options, illiquid contracts |
| Exchange Rules | Can be rejected in F&O | Designed to comply with rules |
| Price | Executes at the next available price | Executes within a protected price range |
New: Full Transparency on Margin
We believe in empowering you with all the information you need. To provide greater clarity, we have now added a feature that shows you the approximate additional margin required when MPP is applied to your order. This ensures you understand the full picture before you trade.
MPP is a powerful tool designed to provide a smoother, more reliable trading experience by significantly reducing order rejections.
What are your thoughts? Have you found MPP useful, and what do you think of the new margin transparency? Let us know in the comments below!