Definition
Basket Order
A basket order lets a trader group multiple securities with defined quantities and order types into a single saved set that can be reviewed and fired together in one action.
Indian trading platforms offer basket orders so a user can build, for example, a multi-leg option strategy or a list of stocks to buy at once, then execute the whole basket with one click. This reduces leg risk and saves time versus placing each order individually.
Basket orders underpin program and basket trading, index replication and pairs strategies, where near-simultaneous execution of all legs matters. They differ from execution algos in that the basket is fired as discrete orders rather than worked over time, though some platforms combine baskets with algo execution.
Related terms
- After-Market Order (AMO)An after-market order is an order placed outside regular trading hours that is queued by the broker and submitted to the exchange when the market next opens.
- Program TradingProgram trading is the simultaneous, automated trading of a large basket of stocks as a single coordinated order, typically used by institutions to execute index-like exposures or rebalances efficiently.
- Basket TradingBasket trading is the buying or selling of a predefined group of securities together in proportions that match a target portfolio, index, or hedge, executed as one logical order.
- Pairs TradingPairs trading is a market-neutral strategy that goes long one security and short a related one when their historical price relationship diverges, betting that the spread will revert to its mean.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.