Order types in trading

Order types

Now, you are about to place an order when you have decided on your entries and exits and are looking to buy the stock.

Then a bunch of options appear…..

To proceed, you must select any one option!

These options are referred to as order types.

Orders are instructions to buy or sell a security at a specific price or under specific conditions in trading.

Traders can use several different types of orders to execute trades in the market. Here are a few examples:

Market order

A market order is an order to buy or sell a security with the goal of obtaining the best price possible as soon as possible. This order is filled immediately, with no opportunity for the trader to wait for better prices.

Buy order

A buy order instructs a broker to purchase a security or commodity at a specific price.

Sell order

When a trader places a sell order, he or she is asking the market to sell their assets at a specific price.

This order allows the trader to protect their assets while also receiving the best possible price for them.

Sell orders are also used to profit from price differences between markets.

Stop order

A stop order is a purchase or sale order for a security at the market price, once the stock has traded at or through a specific price. It is used to limit losses or protect profits.

Limit order

A limit order is a buy or sell order with a specific price, or limit, that must be met or exceeded in order for the order to be executed.

Market order size

The smallest amount of a security that a broker or exchange will allow a customer to buy or sell is known as a market order size.

Limit order size

A limit order is an order to buy or sell a security at a set price or better. The order must be placed with enough liquidity so that the order can be filled immediately. The order size is the maximum amount of money that the trader is willing to spend on the security.

Buy stop order

A buy stop order is an order to purchase a security at a predetermined price if the security reaches the predetermined price before the order is executed.

Sell stop order

A sell stop order is a financial order that instructs a trader to sell a security if its price falls below a predetermined level.

Stop-limit order

A stop-limit order combines a stop and a limit order. When the market price reaches the specified stop price, it becomes a limit order, and it is not executed until the market price reaches the limit price.

Market-on-close order

A market-on-close order is an order to buy or sell a security at the end of the trading day at the market price.

Good-till-cancelled/triggered order

A good-till-cancelled order is one that remains open until the trader either executes or cancels it.

Good till triggered (GTT) works in the same way, and it is not activated until the specified price is reached.

Fill-or-kill order

A fill-or-kill order is one that must be executed in its entirety immediately or it will be cancelled. It is frequently used for large orders in order to ensure that the entire order can be filled at the desired price.

Immediate-or-cancel order

An immediate-or-cancel order is one that must be executed in part or in whole immediately, with any remaining portion of the order cancelled.

One-cancels-other-order

A one-cancels-the-other order (OCO) is a pair of orders in which if one is executed, the other is automatically cancelled. It is frequently used to simultaneously set stop-loss and take-profit orders.

All-or-none order

An all-or-none order (AON) is one that must be filled in its entirety or it will be cancelled. It is frequently used for large orders or orders that must be fulfilled at a specific price.

Pegged order

A pegged order is one that is linked to the market price and automatically adjusts as the market price changes. It can be used to keep a specific price level or to track the market trend.

Trailing stop order

A trailing stop order is a stop order that adjusts automatically in response to changes in the market price. It enables traders to set a stop loss at a specific percentage or dollar amount below the market price, with the stop price automatically adjusting as the market price moves in the trader’s favour.

Order book order

An order book order is one that is placed into the order book without being matched with an existing order.It is frequently used by professional traders to increase market liquidity

Iceberg order

An iceberg order is a partially visible order in the order book, with the remainder hidden.

It can be used to minimise market impact and protect against slippage by concealing the true size of the order.

What I use?

For scalping and options trading, I mostly use market orders, stop loss limit orders for all trades, and GTT orders for swing trading. These orders work well for my trading style. So before placing an order, consider your trading style and preferences.

Conclusion

Traders can effectively execute trades in the market by tailoring their trades to their specific goals and risk tolerance by using different types of orders.

Traders must understand the various types of orders available and select the appropriate order type for their specific needs and trading strategy.

Spread the love
 1         
  
1
Share

Ramya Vaidyanathan

Self-made independent trader who primarily trades stocks, forex, and cryptocurrency! Specialized in M.Sc. Biotechnology & M.B.A. Loves to learn and share everything that can make people's lives easier. Life hacks are the focus of Art of Hacks, a brand website. This website, in particular, focuses on financial hacks such as trading, digital entrepreneurship, and saving hacks. Feel free to comment, share and subscribe to your preferred category! To learn more about trading and my trading journey, subscribe to my YouTube channel Female Trader Ramya!

Leave a Reply

%d bloggers like this:
0