A Variety of Orders Allow Traders To Choose How They Want to Buy and Sell Stocks

Day Trading Orders

Day traders use a variety of orders to buy and sell stocks.

Market Orders

A market order buys or sells a stock at the best price available once that order hits the trading floor. This means that the price could have changed since the order was placed. Consequently, if a trader wishes to buy or sell at a specific price, then a market order is not the best choice. However, these orders are filled in a very short period of time and make for fast transactions.

Limit Orders

Limit orders allows the trader to specify the price at which they wish to but or sell a stock. Limit orders offer no guarantee of being filled. For example, if a limit order is placed to buy a stock once it reaches $40 and the stock is currently priced at $50 then there is no guarantee that the price of the stock will drop to the limit order price at any time during the day. Also, market orders take precedent or limit orders. This makes limit orders a slower type of transaction.

Stop Loss Orders

These orders are used by traders to determine the maximum amount of loss that they are willing to take on a given stock before selling. For example, if a stock is bought at $50 and a stop loss order is placed on this stock at $45, then the moment that the stock’s value drops to $45 the stock will be sold. In this particular case the trader is assured of losing a maximum of $5 per share. Thus, stop loss orders allow a trader to determine the amount of risk that they are willing to take on a particular stock.

Kill or Fill Order

These orders are routed directly to the trading floor and must be entirely filled upon their arrival. If the order is unable to be filled to its entirety, then the order is automatically canceled.

Time Period for Orders

Good-for-the-day orders expire once the day’s trading has been completed if it has not been filled. Good-until-cancelled orders can run multiple trading days and are completed upon their execution or cancellation by the customer.

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