CandleFocus Glossary Editor
What is an Order?
An order is an instruction given to a broker by a trader to either buy or sell an asset on the trader’s behalf. Orders allow traders to passively invest in the markets as a way to trade without having to actively monitor positions. Orders can help traders maintain control of their trading strategies, minimize trading costs, and protect against unforeseen adverse price movements.
Types of Orders
There are several different types of orders that traders use. The type of order used depends on the investor's outlook for the asset, how quickly they want to get in and out of a position, and how concerned they are about the price they pay for or receive for the asset. Some of the most common order types include:
Market Order: This type of order instructs the broker to buy or sell the asset at the current market price that has been determined by buyers and sellers in the market.
Limit Order: A limit order instructs the broker to buy or sell an asset at a specific price or better. It guarantees the trader will not pay more than the specified limit price in a buy order, and that they will not sell for less than the specified limit price.
Stop Order: A stop order is an instruction to the broker to buy or sell the asset based on a certain price. Traders use stop orders to limit the losses they may otherwise incur if the price of the asset moves in the opposite direction of an open position.
Stop Limit Order: A stop limit order is a combination of the features of a stop order and a limit order. An investor types in two prices, the stop price and the limit price, and the order is triggered when the assets reach the stop price. While the order is guaranteed to execute at the limit price or better, it is not guaranteed to execute at all. Good 'til Cancelled (GTC) Order: As the name suggests, this type of order is good until either the order is executed or cancelled. It is one of the most common order types used by investors who want to give themselves the ability to stay in the market for a longer period of time.
Conclusion
Orders enable traders to control the timing and price of their trades without actively monitoring the markets. By understanding the different order types, traders can take advantage of possible opportunities for profits, minimize trading costs, and protect against unforeseen adverse price movements.
An order is an instruction given to a broker by a trader to either buy or sell an asset on the trader’s behalf. Orders allow traders to passively invest in the markets as a way to trade without having to actively monitor positions. Orders can help traders maintain control of their trading strategies, minimize trading costs, and protect against unforeseen adverse price movements.
Types of Orders
There are several different types of orders that traders use. The type of order used depends on the investor's outlook for the asset, how quickly they want to get in and out of a position, and how concerned they are about the price they pay for or receive for the asset. Some of the most common order types include:
Market Order: This type of order instructs the broker to buy or sell the asset at the current market price that has been determined by buyers and sellers in the market.
Limit Order: A limit order instructs the broker to buy or sell an asset at a specific price or better. It guarantees the trader will not pay more than the specified limit price in a buy order, and that they will not sell for less than the specified limit price.
Stop Order: A stop order is an instruction to the broker to buy or sell the asset based on a certain price. Traders use stop orders to limit the losses they may otherwise incur if the price of the asset moves in the opposite direction of an open position.
Stop Limit Order: A stop limit order is a combination of the features of a stop order and a limit order. An investor types in two prices, the stop price and the limit price, and the order is triggered when the assets reach the stop price. While the order is guaranteed to execute at the limit price or better, it is not guaranteed to execute at all. Good 'til Cancelled (GTC) Order: As the name suggests, this type of order is good until either the order is executed or cancelled. It is one of the most common order types used by investors who want to give themselves the ability to stay in the market for a longer period of time.
Conclusion
Orders enable traders to control the timing and price of their trades without actively monitoring the markets. By understanding the different order types, traders can take advantage of possible opportunities for profits, minimize trading costs, and protect against unforeseen adverse price movements.