Finance

Different types of stock orders

3 Mins read

An order type is the pattern that traders use through the stock brokers to execute a trade. For execution of such trades they use the trading platforms of brokers or stock exchanges. 

However, there are different types of stock orders that should be aware of. In the article, we have discussed the different types of stock orders that traders can access and which one they can use as per their trading objectives. .

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So, let’s know the stock order types. 

Stock Order Types

An order is a set of instructions which traders customise according to their needs and market conditions. They set them up to buy and sell stocks on the trading platform. 

Below we have the different types of stock orders that traders can use for profitable trading: 

Market Order

Market order in the stock market is the order type that allows buy and sell of the shares immediately. The trade of shares at its current market price. This guarantees traders that the trade will be executed however, it does not guarantee an exact price. 

The order gets executed near or at the current bid or ask price. The execution of trade is at the best available price and not necessarily at the last traded price. 

Limit Order

A limit order is the one where traders specify the exact price at which they will be buying and selling shares. If the order is executed it will be at the specific limit price. However, in the order there is no guarantee of order execution. 

The buy limit order allows traders to buy the shares at specific limit price or lower. While the sell limit order is an order to sell stocks at specific limit price or higher. 

Stop-Loss Order

A stop-loss stock order type is to buy and sell shares as soon as the price of the shares reaches a specific trigger price or stop price. The order is to minimise the losses due to the stock price fluctuations. 

Using the order type traders can limit their market risk. 

Cover Order

A cover order is an advanced order type for intraday trading in stocks. It is to reduce the risk of unlimited loss. The cover order has two individual orders that are placed simultaneously. 

It has market order and a compulsory stop-loss order. These orders are in the specified range. Once the order is executed, the stop-loss order gets placed. 

Good Till Cancelled Order

Good till cancelled order is the order type to buy/sell the stocks till they remain active. Also, until the order gets fulfilled or cancelled by the trader. Traders of the order can set an expiry date for the validity of the order. 

After Market Order

After market order is the order type that is placed after-market hours when the market gets closed. So, the timing of the market depends on the market a trader is trading in. 

The market order type is specifically for those traders who are bust during the trading hours

Trailing Stop-Loss Order

The trailing stop-order is a similar order type to the stop-loss order. However, the stop price in this is dynamic. The stop-loss price of the shares trails with the movement of the stock price in the market. 

But it is only the stock price that moves in a trader’s favour. So, the order allows traders to limit their loss without setting a limit on the possible profits of the trade. 

Bracket Order

The Bracket order consists of three individual orders. The bundle order provides complete automation of buy and sell of the shares, booking profit, and covering the loss. 

The three order included are: 

  • A buy/sell order
  • A target order
  • A stop-loss order 

Immediate or Cancelled Order

The order type is different as it is when a trader places an immediate or cancelled order. The order execution is either immediate or cancelled. In the order type time is of great significance. 

Time is of great utility in the trade and traders who do not have time can go for the stock order type. 

Conclusion

In financial trading there are various order types. Traders can use these orders to make successful trades easily. The article has discussed the major stock order types and what each of the orders means. 

Mostly stock traders use market order, limit order and the stop-loss order types. However, other order types can be used for effortless and efficient trading online. 

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