The word Do Not Reduce identifies to broker directions to lower the purchase price tag on an arrangement by the sum of a normal income dividend on the ex-dividend day. Do Not Reduce orders generally employ when the purchase price of a order is currently under market, and followed by Good-Til-Canceled directions.
If not given, a broker will on average lower the purchase price on limit orders to purchase or sell a stock, or prevent limit orders to sell a stock, even on the afternoon that the security trades ex-dividend. That is achieved because every time a stock goes ex-dividend, its worth declines by the number of the dividend. To be sure the arrangement is just influenced by market requirements, the broker lessens the purchase price by the sum of the dividend.
A Do Not Reduce (DNR) order instructs the broker to continue to keep the initial cost to the purchase. DNR orders connect with get and sell limit orders in addition to prevent limit orders which can be priced below market. DNR pertains to conventional income dividends; it doesn’t connect with stock gains.