Owing to unprecedented advancement in Digital Technology worldwide, investors feel proud to carry on buying and selling of stocks on their own and are not prepared to seek advisors on their side for trade executions. For such investors, we present guidance here about the diverse types of orders and when such are manageable. In this blog, we present certain types of Stock Orders and how such promote investing style.
- To bring impactful stock trading, scores of different orders can be utilized,
- With a market order, one can buy or sell shares at prices that prevail in the market until the order is filled,
- With a limit orders, a price is determined at which order must be filled but it is not assured that the order or some part of it, will still trade if the limit is set to be too high or too low,
- One has to pay low commissions on market orders,
- Stop orders are a type of limit order, which is given in situations when stock move above or below a specific level and are often used as a medium of insurance against larger losses or to protect profits.
Market Order And Limit Order:
On a broader basis, these are two types of orders which every investor should be aware of:
What is a Market Order?
Such can be defined as the most fundamental trade which is an order, given to buy or to sell on an immediate basis and at the price prevailing currently. When one wants to buy a stock, then he will have to pay a price that is or is around the asking price. Then, if one wants to sell a stock, he will get a price which is or is around the bid posted thereby.
Then, we keep in mind that the price on which last trade was executed, would not be the exact price at which market order will be based. This is mainly because the markets are pretty whimsical and the price at which actual trade execution takes place, can undergo change pretty quickly. Prices remain unchanged when the bid and ask prices are exactly the ones which were traded last.
Price is not defined by Market Orders, while such influence order’s immediate execution. Among lone investors, market orders are popular, as they are always willing to buy or sell a stock sooner than later. With Market Orders, we are guaranteed to get trade filled and to get it executed without delay and this is a big advantage of having Market orders. Investors may not know the actual price on which stock buying and selling are done, market orders are executed near to the bid and ask prices but such is the case for stocks that trade a huge number of shares per day, say tens of thousands of shares.
What are Limit Orders?
Such is also known as a pending order, allowing investors to buy and sell securities at pre-determined prices in the time to come. Such an order type is used to accomplish a trade when the price rises to a specific level, the order is not filled if the price fails to reach this level. Actually, with a limit order, a maximum or minimum price is set for limit orders, at which a trader wishes to sell or buy.
Types of Limit Orders:
Buy Limit: Such is an order for purchasing security at or lesser than the price specified.
Sell Limit: This order is to sell a security at a specific price or at higher than it.
Buy Stop: An ordering to buy a security at a price that is higher the market bid currently.
Sell Stop: Security is sold at this order at a price which is lesser than the current market ask.
Market and Limit Order Costs
Market or limit order is to be decided upon and investors should know the added costs. Generally, less commission is there for market orders as compared to limit orders and such difference can be somewhere $2 to $10. Then, the commission of $10 can be increased up to $15, when a limit restriction is placed thereby.
Additional Stock Order Types
After two major orders, there are some additional types of stock order depending upon additional restrictions and specific instructions that are allowed by brokerages on their orders, such as:
- Stop-Loss Order: This order gets into action when a certain price is passed and it gets enabled as a prominent market order. By the time, a certain price is not there, it remains dormant. On-stop but, on-stop sell and stopped market are its other names. When one goes on vacation, such is the best time to utilize it.
- Stop-Limit Order: A limit is put on the price at which such get executed and it has 2 specified prices, namely, stop price and limit price. Here, the sell order takes shape of a limit order which gets under execution at the limit price or any better price. This dissolves the issue arising from stop-loss orders which arise during a flash crash when prices drop.
- All or None (AON): A crucial order to those who buy penny stocks, ensuring that one gets either whole lot of stock as requested or none of them. Problems are there when stock is limited.
- Immediate or Cancel (IOC): This is for any remaining amount for an order which can be executed in the market (or at a limit) within a small time frame, say moments.
- Fill Or Kill: Combination of AON and IOC, where whole order size is traded but in scant time, i.e. within seconds. If no condition is there, the order is deactivated.
- Good Till Cancelled: A time-bound which can be put on different orders. Such order is active till it is canceled by users, while maximum time, till we can keep the order open, is 90 days, as per Brokerages.
- Day: If no time window is set for expiry, then the order is termed as a day order. It simply means that once a trading day is ended, the order expires too.
- Take Profit: Such order is also known as profit target and is intended to stop trade once a profit level is reached and such is always linked to an open position of any order pending.
Please note that all online trading portals do not allow all these types of order and you need to first check with your company authorized for the purpose. DicnoFX a prominent agency dealing in Forex. We plan and execute customized trade orders as per the demand, preference, and penchant of the buyers with assured returns on their investment as profits. Wither you look for short term profits or long term market gains, please Contact Us for Smart Investment and we shall unravel new ways of profit-making for you in Forex.