Different Types of Stock Market Orders

I’m always thinking about losing money as opposed to making money. Don’t focus on making money, focus on protecting what you have.

— Paul Tudor Jones

Have you ever been confused about the different types of orders you see when you're about to buy or sell a stock or other security? Well, you're in the right place! In this article, we're going to walk you through the different order types, what they mean, and when you should use them.

Knowing the different order types and using the right type of order when trading in the market can help protect your money by managing risk and potentially limiting losses. When you place an order through your broker account, the exchange will fill your order when certain conditions are met. This is how you can buy or sell shares in the stock market.

Whether you're just starting out as a stock investor or have been doing it for a while, understanding the different types of orders used in the stock market is crucial. Before you jump into buying and selling stocks, take some time to learn about the different order types and when to use them.

Types Of Stock Market Order

  1. Market order
  2. If you're new to trading, one of the first things you'll come across is a market order. It's a pretty basic type of trade where you buy or sell a stock immediately at the current market price.

    One thing to keep in mind is that a market order doesn't guarantee the execution price. So, for example, if you want to buy a stock that's currently priced at $54, you could use a market order, but the actual execution price could end up being a bit more or a bit less. It could be $55.80 or $54 or $53.80 - nobody really knows for sure.

    So, if you're okay with potentially paying a slightly different price than what the stock is currently trading at, a market order could be a good choice for you. It's a quick and easy way to make a trade, and it guarantees that the trade will be executed.

  3. Limit Order
  4. When we're looking to buy or sell stocks at a specific price, we can use a order type called a "limit order". This can be used for both buying and selling, and works like this:

    • If we're buying, we'll set a limit price that we're willing to pay. The order will be executed at that price or any lower price.
    • If we're selling, we'll set a limit price that we want to receive. The order will be executed at that price or any higher price.

    Now, you might be wondering whether a limit order or a market order is the better option for you. Well, that really depends on your priorities! If you're most concerned with getting the order completed quickly, a market order might be the way to go. But if the price of the order is more important to you, a limit order is the better choice.

  5. Stop Order
  6. Ever heard of a stop order? It's like a smart command you give to your broker. You can use it to buy or sell a security when it reaches a certain price. It's pretty cool because when that price is hit, your stop order automatically becomes a market order. It's a neat way to manage your investments and make sure you're in control. Give it a shot, and see how it can help you!"

  7. Stop Loss Order
  8. You might come across two terms—stop order and stop loss order—and it's totally normal to feel a little confused about them. But here's the good news: they actually mean the same thing and can be used interchangeably!

    Sometimes brokers refer to it as a stop order, while others may use the term stop loss order. It's just a matter of different names for the same concept. So, don't worry if you see these two phrases being used differently.

    A stop-loss order is an instruction to a broker to buy or sell a security at a specific price. read more...

  9. Stop-Limit Order
  10. Trailing Stop Order
  11. Market-if-touched order
  12. One-cancels-the-other order
  13. Immediate or Cancel Order
  14. Good 'Til Canceled Order
  15. Fill or Kill Order
  16. Discretionary Order
  17. Market on Close Order
  18. Market on Open Order
  19. Day Order
  20. Let's talk about a type of trade order called a day order. This is an order you give to your broker to execute a trade at a specific price, but it's only valid for the day you create it. If your order doesn't get filled by the end of the day, it'll be automatically canceled.

    So, let's say you want to buy a stock at a specific price, like $50. You can use a day order to tell your broker to buy that stock for you at $50 or less, but only if that happens before the end of the day. If it doesn't happen, your order will expire and you'll need to create a new one if you still want to buy the stock.

    Day orders can be helpful if you're looking to make a trade quickly, but don't want to hold onto the order for too long.

  21. Hidden Order
  22. Reserve Order
  23. Iceberg Order
  24. Post Only Order
  25. Extended Hours Order (Pre-market and After-hours)
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