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PDF Stock Trading - Order Types

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Orders at each price level are filled in a sequence determined by the rules of the various exchanges; therefore, there can be no assurance that all orders at a particular price limit including yours will be filled when that price is reached. After the limit price is triggered, the security's price may continue to rise or fall.

As a result, your order may or may not execute depending if the security's price in relation to your specified limit price is too great. Bear in mind that your order may execute at a price more or less than your specified limit price. Limit orders are also subject to the existence of a market for that security. Stop orders are used to buy and sell after a stock has reached a certain price level. A buy stop order is placed above the current market price, and a sell stop order is placed below the current price to protect a profit or limit a potential loss.

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For listed securities, a stop order to buy becomes a market order when a trade occurs at or above the stop price. A stop order to sell becomes a market order when a trade in the security occurs at or below the stop price. For over the counter OTC securities, a stop limit order to buy becomes a limit order, and a stop loss order to buy becomes a market order, when the stock is offered National Best Offer quotation at or higher than the specified stop price. A stop limit order to sell becomes a limit order, and a stop loss order to sell becomes a market order, when the stock is bid National Best Bid quotation at or lower than the specified stop price.

Note, however, that some market makers may apply the guidelines for listed security stop orders to OTC securities. Further information regarding specific transactions is available upon written request. Stop orders are not always accepted. The specialists on the various exchanges and market makers have the right to refuse stop orders under certain market conditions.

Not all securities are eligible for stop orders. On open limit orders to buy and open stop limit orders to sell listed stocks, the limit price is automatically reduced on the "ex-dividend" date by approximately the amount of the upcoming dividend, unless you specify the do not reduce condition when you place the order. Company news or market conditions which significantly affect the price of a security could prevent a stop limit order from being executed if the price of the security moves through your stop limit price.

For example, a stock is quoted at 85 Bid and A sell stop limit order for a listed security placed at 83 is triggered at 83, at which point the order becomes a limit order. The stock would have to trade at 83 again for the sell stop limit order to be considered for execution at 83 or better. If the trigger price of 83 is reached, but the stock price continues to fall below 83, the order is not considered for execution. Like any limit order, a stop limit order may be filled in whole, in part, or not at all, depending on the number of shares available for sale or purchase at the time.

The specialists on the various exchanges and market makers have the right to refuse the orders under certain market conditions.

A stop limit order automatically becomes a limit order when the stop limit price is reached. Company news or market conditions which significantly affect the price of a security could result in the execution of a stop loss order at a price dramatically different from your stop loss price. A sell stop loss order for a listed security placed at 83 is triggered at 83, at which point the order becomes a market order.

The market order is filled at the next available price s , which could be lower than Trailing stop loss and limit orders are available on all listed and OTC securities. For listed securities, the trigger is based off the last trade, regardless of whether it is a buy or a sell order. For OTC securities, the trigger is based off the bid for a sell and the ask for a buy. You place a time limitation on a stock trade order by selecting one of the following time-in-force types:.

If you place a day order during the standard market session, the order is good until the current day's market close 4 p. If you place a day order after the close of trading, the order is good until the close of the next trading day. If you place a limit order with a time-in-force of day during an extended hours session, the order is good until the session ends.

Order Types and Conditions

If the order is not executed after days, the order is automatically cancelled. Some plans have been granted the ability to place GTC orders without a time limit. These orders remain in effect until the order executes, or until plan rules require the order to be cancelled. Fill or kill orders are either immediately completed in their entirety or canceled. They are good only for the current day.

You can place fill or kill orders only during market hours on orders of shares or more. It includes the stock market and the bond market. Capital market is the ideal place for companies and governments to raise long-term funds. The capital market transactions are done while trading in the capital market securities. A typical capital market includes the trading of securities. Stocks and bonds are the two types of securities where the capital market investments are done. There are financial regulatory bodies in every country that monitor and regulate the capital market transactions in order to protect the interest of investors.

But once if you understand the concepts, you will find it very easy to transact. Before a share is purchased or sold, you should instruct your broker about the order. It means you should specify the order very clearly, how the order is to be placed. Sending proper instructions to your broker through phone or online is the first step of securities trading.

Basically there are two types of share transaction exist in the market such as;. Buy orders are the orders to buy the stocks.

These are placed when you expect a rise in share prices. The investor place a buy order when he finds the stock price is cheaper and the stock price will go up.

Order Types - FEC | Online Trading Academy

Before placing an order you have to make sure that what is the price at which you are going to buy the stock, what is the quantity of shares you need, also ensure you have enough money to buy the stock. Sell orders are the orders to sell the stocks. If you are finding that the price of a particular stock that you are holding presently will go dawn, you have to place a sell order. The reason for selling can be anything either because the investment target has been met or you expect a decline in price. A Limit order is an order to buy or sell stocks at a specified price.

Use of a Limit order, however, does not guarantee an execution. A market order is an order to buy or sell a stock at the price at it is currently available in the market. When you submit a market order, the order can execute at any price that is prevailing in the market. There is no guarantee in the money that you are going to receive.

For example if you are placing a buy order for axis bank, the order will be executed at the price that is available in the market. A stop loss order permits you to place an order which gets activated only when the last traded price of the share is reached or crosses a predefined price. Stop loss price is also called as trigger price. If you feel that any particular share will be worth buy or sell only after it crosses certain price limits then this type of orders are good. Buy Hindalco at Rs with a stop loss of Rs , it mean that if the share price falls to Rs , the shares will be sold, by limiting your loss to Rs There are some demerits for Stop loss order.

First, if the stop is placed too close to the current market price, the investor might have his position closed out because of a minor price fluctuation. We will take the same example. Buy Hindalco at Rs. In this case, if the market opens at after that it go down and touch Rs. But after touching the Stop loss figure if the stock price started rising and it went till , you will lose the opportunity to make profit. A stop loss market order is a special kind of limit order; it is a mixture of stop loss order and market order.

A stop market order to buy is treated as a market order when the stop price or a price above it is reached.

Long Versus Short

Therefore, stop market order to sell is set at a price below the current market price, and a stop order to buy is set at a price above the current market price. The likely danger associated with Stop Loss Market Order is that they will become market orders after the expected price level has been reached, the actual transaction will take place some distance away from the price you had in mind when the order. The stop loss limit order is an advanced version of stop loss order; it is a mixture of stop loss order and limit order.