Stock Order Types
Using the services on online brokers includes familiarization with the different types of orders that are in use for the execution of the various trades by investors.
Different buy and sell orders are available for the facilitation of gaining more control over stock transactions.
The different orders have different restrictions. For instance, some of them restrict transactions by price, whereas others restrict them by time.
Some of the stock orders include:
- Market Order
Under a market order the broker is required to sell or purchase a particular stock immediately no matter what the prevailing price is. This is the quickest and least expensive way in which you can complete your order.
Volatile markets may deprive you of the possibility of getting a price close to the one that is listed last. Additionally, you are not guaranteed that you will get the last price listed if you are following the market.
- Stop Loss Order
Stop loss order states a price level which if reached turns the order into a market order. As a result the broker is required to sell the stock. The price set at the stop order is below the current market level. Stop loss orders protect their holders from losses incurred from big drop in a stock.
In case the price of the stock rises, the stop loss order becomes useless, since no actions are taken.
- Trailing Stop Order
As compared to the stop loss order, the trailing stop order protects your profit. In the previous order a protection against loss was provided.
Trailing stops can be used to follow up the profit you have in a particular stock. The trailing stop order is entered as a percentage of the market price. A transformation into a market order is done in case the market price falls by the percentage stated in the trailing stop order. As a result the broker is required to sell the stock.
In the case of rising stock prices, the trailing stop order follows it. This is so since it represents a percentage of the market price. A protection to the further gains is provided.
- Limit Order
Under a limit order the broker is required to sell or buy a particular stock at a pre-specified price. Once the desired price is reached, the order is completed. Otherwise, the order is not filled.
Limit orders are helpful since they provide investors with an entry and exit point through the setting of the price.
On the other hand, limit orders may represent a more expensive way of executing an order than by a market order. This is not always the case, but you should check with your broker in order to avoid unnecessary expenses.
- Good Till Canceled (GTC) Order
Under a good till canceled order the broker is required to keep the order active until the investor cancels it. As it can be seen, this order is used in a combination with other orders. What good till canceled order does is putting a time frame for the order with which it is in combination.
- Day Order
Under a day order you should understand every order different form a GTC order. So, if your broker doesn't complete your order at the same day, the next day you should re-enter the order.
- All or None Orders
Under all or none order the broker is required to complete the entire order or none of it. This type of order is used for thinly traded stocks.
Some brokers use different names for these orders. However, their functions are all the same no matter their name. Market orders, stop loss orders and trailing stop orders represent the orders with which you should be most familiar with.
Rate this article : Low | High |
- Stock Investing vs. Saving
- Investment Goals Planning
- Mutual Funds vs Individual Stocks
- Classes of Assets - Asset Class Definition
- Stock Investing Basics
- Setting Stock Prices
- Stock Buyback Reasons
- Stock Basics
- Stock Dividends Basics
- Stock Market Cycles
- Federal Reserve Board (Fed) Functions and Importance
- Stock Market Sectors Classification
- Stock Split Basics
- Stock Market Indexes and Fair Value Indications
- Stock Market Movements
- Stock Share Types
- Bid and Ask Prices
- Stock Trading Basics and Order Types
- Market Makers Role and Responsibilities
- NYSE and Market Specialists
- Company Market Capitalization
- Stock Price Influences
- Newspaper and Online Stock Quotes
- Stop Loss Order Fundamentals
- Trailing Stop Order Basics
- Advance Decline Ratio Basics
- Foreign Stocks Basics
- Asset Allocation Basics
- IPO Basics and Strategies
- Earnings Season Basics
- Option Basics and Types
- Consumer Price Index Basics
- CPI Basics
- Rising Interest Rates and their Effects
- Stock Market Investing Basics
- Why Do Companies Go Public
- Introduction to Stocks
- Stock Price Volatility
- Fundamental Analysis Technique Basics
- Technical Analysis Basics
- Importance of Current Assets and Current Liabilities
- Price/Book Value Advantages and Disadvantages
- Understanding Return on Equity and Return on Assets
- Understanding Inventory Turnover Ratio
- Price to Earnings Growth Ratio (PEG) Explanation
- Price to Earnings (P/E) Ratio Basics
- How to Read Stock Tables
- Understanding Trade Execution
- Auditing Essentials
- Understanding Mutual Companies
- What Are Financial Analysts?
- What Investors Need to Know about Financial Analysts
- Investment Planning 101 – Getting Started on Investing
- Hedge Funds 101: Introduction to Hedge Fund Investing
- Variable Annuity Contracts Explained
- Closing Price Discrepancies
- Convertible Securities Definition and Types
- Ex-Dividend Date and Record Date Explained
- What Is Day Trading?