Day order
An order valid only for the single trading day on which it is entered — if not executed by the end of the day, the trading system automatically cancels it.
In plain language
Most orders in the futures and options market are not meant to sit around indefinitely. Unless a trader says otherwise, the exchange assumes an order is only good for today.
The workbook's own words: "A Day order is an order which is valid for a single day on which it is entered. If the order is not executed during the day, the trading system cancels the order automatically at the end of the day."
How it works
Day order is one of the time conditions the workbook lists for F&O orders, alongside Immediate or Cancel (IOC):
| Time condition | What happens |
|---|---|
| Day order | Valid only for the day it is entered; automatically cancelled by the trading system at the end of the day if not executed |
| Immediate or Cancel (IOC) | Executed (in full or in part) as soon as it is released into the trading system; any unmatched portion is immediately cancelled |
Time conditions are one axis of order classification; price conditions (limit, market, stop-loss) are a separate axis, and the workbook notes that "various combinations of the above are allowed, providing flexibility to the users" — so an order can, for example, be a day limit order, combining a time condition with a price condition.
Unless a trader specifies otherwise, an order placed on an exchange trading system is generally treated as a day order — it does not carry over to the next trading session on its own. This is why the workbook draws the contrast with IOC: a day order can sit unmatched for the whole session before being cancelled, while an IOC order is cancelled (the unmatched part of it) within moments of entry.
A worked example
A trader places a limit buy order for 20 lots of a stock futures contract at Rs 495, when the contract is currently trading at Rs 500, expecting the price to dip during the session. The order is entered as a day order.
| Time | Contract price | Order status |
|---|---|---|
| 9:20 am (order entered) | Rs 500 | Resting, unmatched — price hasn't reached Rs 495 |
| 11:45 am | Rs 497 | Still resting, unmatched |
| 2:30 pm | Rs 496 | Still resting, unmatched |
| 3:30 pm (market close) | Rs 496.50 | Never touched Rs 495 — order is automatically cancelled by the trading system at end of day |
The trader wakes up the next trading day to find the order gone — not because anything went wrong, but because a day order was never meant to survive past the session in which it was entered. If the trader wants the same Rs 495 limit to be live again the next day, a fresh order has to be placed; the system does not automatically resubmit or carry forward a day order.
Had the trader instead wanted the order to execute immediately or not at all, an IOC order at Rs 500 (rather than a day order at Rs 495) would have been the right choice — matched instantly against the best available price, or cancelled within moments if no match was found.
Why NISM asks about it
Chapter 6 (Trading Mechanism), section 6.3 (Order Management), defines Day order as one of the time conditions immediately before Immediate or Cancel (IOC), in the same passage that introduces limit, market and stop-loss orders as price conditions. Expect a definitional recall question — what happens to an unexecuted day order at end of day — and a question distinguishing day orders from IOC orders on how and when the unmatched portion is cancelled.
Common exam traps
- A day order is cancelled at the end of the day it was entered, not carried forward to the next session. A trader wanting the same order live the next day must re-enter it.
- Day order and IOC are both time conditions, not price conditions — do not confuse either with limit, market or stop-loss orders, which control price rather than duration.
- IOC cancels the unmatched portion immediately on entry; a day order can remain resting, unmatched, for the entire session before being cancelled at day's end — a day order gives the market the whole day to find a match, IOC gives it seconds.
- Time conditions and price conditions can be combined — a day order can carry a limit price, a stop-loss trigger, or simply be entered at market.
- Cancellation is automatic, done by the trading system itself at end of day — the trader does not need to manually cancel an unexecuted day order.
Where this is taught
- Series XVI · Chapter 6: Trading Mechanismintroduced here
- Series VIII · Chapter 6: Trading Mechanismintroduced here
Related terms
- Stop loss orderAn order that stays out of the market until the price reaches a trigger price, then enters as a limit or market order - used to cap the loss on an open position.
- Limit orderAn order to buy or sell a contract at a specified price or better — lower for a buy, higher for a sell — which waits in the order book if it cannot be matched at once.
- Market orderAn order to buy or sell a contract at the best price currently available in the market — no price is specified, so it trades immediately against the opposite side of the order book.
- Good-Till-Date and Good-Till-CancelledTwo time-related order types: a GTD order lives until a date the trader names, and a GTC order lives until it executes, the trader cancels it, or the contract expires, whichever is earlier.
- Immediate or CancelA time condition on an order: whatever can be matched the moment it reaches the market is executed, and any unmatched balance is cancelled immediately rather than waiting in the order book.
- Price-time priorityThe order-matching rule on Indian F&O platforms: the best price is matched first, and among orders at the same price, the one entered earliest gets priority.
- Order driven marketA market where buy and sell orders are matched automatically by the trading system on a price-time priority basis, rather than through a designated dealer or market maker quoting prices.