| Types
of Orders
Day Orders
ALL orders, unless specified otherwise, are
considered to be DAY ORDERS and are good ONLY for the session they
are entered.
GTC or Open Orders
If the trader wants the order to remain working
beyond the specific day it is entered, the order is placed as an
OPEN or GTC (Good Till Canceled). This order will remain working
until the trader cancels the order. A word of caution: it is easy
to forget that there is an OPEN or GTC order working and this can
lead to errors. Keep a detailed record of all OPEN or GTC orders
you have working and check them with your broker daily.
Limit Orders
A LIMIT order is used to ensure that the order
will be filled NO WORSE than a specific price. LIMIT orders can
be both buy and sell orders. BUY LIMIT orders MUST be placed BELOW
the market and SELL LIMIT orders MUST be place ABOVE the market.
On occasion, a LIMIT order can be filled better than the specified
price but never worse than the specified price.
Market Orders
A MARKET order is used to either buy or sell
at WHATEVER the price of the market is at the time the order is
EXECUTED (as opposed to when the order is placed). MARKET orders
are generally ALWAYS filled and allow the trader to initiate or
liquidate a position REGARDLESS of the price. In some cases such
as when the market is "locked limit", a MARKET order may NOT be
filled.
Stop Orders
A STOP order is executed ONLY when the market
reaches a specific price and then the order becomes a MARKET ORDER.
BUY STOP orders MUST be placed ABOVE the market and SELL STOP orders
MUST be placed BELOW the market. Generally, a STOP order is used
as a defensive order to exit the market and protect against adverse
moves in the market (see below for another use of a STOP order).
Since, when activated, a STOP order becomes a MARKET order, when
filled it is almost always filled at a worse price and sometimes
at a MUCH worse price. Another use of a STOP order is to enter the
market by either buying strength or selling weakness. Once the market
has reached a specific price and the trader has determined that
at this price level the market has signaled that it will continue
in that direction, a STOP order is placed at that price level. Again,
BUY STOP orders MUST be ABOVE the market and SELL STOP orders MUST
be below the market. As with a MARKET order, in some cases such
as when the market is "locked limit", a STOP order may NOT be filled.
Stop Limit Orders
A STOP LIMIT order is much the same as a STOP
order but the execution price is limited, providing the trader with
a specific price level where the order will be filled no WORSE than
the specified price. As with a STOP order, BUY STOP LIMIT orders
MUST be placed ABOVE the market and a SELL STOP LIMIT order MUST
be placed BELOW the market. As with a MARKET order, in some cases
such as when the market is "locked limit", a STOP LIMIT order may
NOT be filled. A STOP LIMIT order is NOT accepted on all exchanges.
Stop Close Only Orders
A STOP CLOSE ONLY order is exactly the same
as a STOP order but is ONLY activated if the price level is at or
exceeds the activation level on the CLOSE. As with a STOP order,
BUY STOP CLOSE ONLY orders MUST be placed ABOVE the market and a
SELL STOP CLOSE ONLY order MUST be placed BELOW the market. As with
a MARKET order, in some cases such as when the market is "locked
limit", a STOP CLOSE ONLY order may NOT be filled. A STOP CLOSE
ONLY order is NOT accepted on all exchanges.
Market If Touched Orders (MIT)
A MARKET IF TOUCHED order (MIT) is much the
same as a LIMIT order except that once the limit price is hit the
order becomes a MARKET order and will be filled at WHATEVER the
price of the market is at the time of EXECUTION. In the case of
an MIT order, it can be filled AT the price specified, WORSE than
the price specified, or in some cases BETTER than the price specified.
Generally, a MIT order will be filled AT the price specified or
WORSE than the price specified. As with a MARKET order, in some
cases such as when the market is "locked limit", a MARKET IF TOUCHED
order may NOT be filled. A MARKET IF TOUCHED order is NOT accepted
on all exchanges.
One Cancels The Other Orders (OCO)
A ONE CANCELS THE OTHER order (OCO) has two
parts to it and once one part of the order is filled, the other
part of the order is canceled. A ONE CANCELS THE OTHER order is
NOT accepted on all exchanges.
Spread Orders
A SPREAD order is an order to simultaneously
buy and sell one contract against another. This can happen within
the same market (such as buying JULY soybeans and selling NOVEMBER
soybeans) or between two different markets (such as buying CORN
and selling WHEAT).
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