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What Are The Different Types Of Trading Orders

Posted by on Jun 13, 2017

Trading and investments are extremely tough to navigate if you don’t know the basics. Among the most important things to learn up about when you are trading are trading orders.

What is it?

When a broker is trading, a trading order gives a trader and instruction to either take or leave a position. While the easiest method to trade is to click on buy when a particular option meets a trader’s requirement and to sell when the trader feels like the option has outlived its utility, it isn’t the most efficient method to do it.

A simple buy-sell-trade based on convenience could lead to losses. Not only that, this method of trading is highly time-consuming. Add to it the additional losses a trader can incur from slippages, and overall the very simplistic buy-sell trading method is not profitable.

Types of orders

  • Protective stop loss orders – this kind of order creates a limit within which a trader can risk money in a particular asset. The boundary beyond which the trader cannot trade prevents any further loss for the trader in case their asset is losing value on a trading day. The price level that governs this type of order is pre-determined. In fast-moving markets and other markets, this type of order is placed the instant a trader begins trading
  • Market order – this is the most basic type of order. This order carries the instruction for a broker to buy or sell when the price is right/available. This kind of order is executed immediately. The good thing about this kind of order is that a trade is guaranteed to get filled by a trader when this kind of order is given.
  • Limit order – this kind of order carries the instruction to buy or sell at a given price or a better price. A buy limit order can be executed when the price lesser than or equal to the given price band. A sell limit order is executed when the price is greater than or equal to the given price band. This order will be fulfilled only if an asset reaches the price band specified.
  • Stop orders – this order activates only when a particular price band has been reached. A buy stop order is placed above market and a sell stop order is placed below market. When the level for the stop order has been reached then this gets converted into a market order or a limit order.
  • Conditional orders – these are advanced types of orders. They are either submitted or canceled depending on the criteria at play. Conditional orders have to be created and placed before trade begins. This is the most grassroots type of trade automation. In a one-cancels-the-other type multiple trades are placed and if one trade fulfills its criteria all others get canceled. An order-sends-order type sends orders to the market once a certain criterion is fulfilled.

Trades are basically carried out based on elaborate instructions and manipulations of numbers. It is imperative that traders be aware of what goes on before jumping into this. In fact, once traders are comfortable with his kind of activity, they can automate their market participation by using trading platforms like Millionaire Blueprint for their profits.

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