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13 Types of Stock Orders

When it comes to individual investing, it’s important to learn about the different kinds of orders you can place through your broker. Knowing these stock orders and when they’re appropriate can help you make the most of your investment strategy. Let’s explore what stock orders are, the various types of stock orders that exist, and how they work.

  • Stock orders refer to instructions, specifications, or requirements on how to buy or sell a stock.
  • Market orders refer to an order to immediately buy or sell a security, while limit orders refer to orders where investors can buy or sell a stock at a specific price in the future.
  • Limit orders give you more control over the trading prices when you buy or sell a stock.
  • More often than not, limit orders have higher commissions than market orders.

What Are Stock Orders?

Image via Unsplash by firmbee

Stock orders refer to instructions, specifications, or requirements on how to buy or sell a stock. The types of stock orders available for you to execute depending on your particular broker.

Types of Stock Orders

Different types of stock orders can help you make better trades on the stock market. When it comes to stock orders, there are two main types — market orders and limit orders. Here’s a detailed look at each:

Market Order

This type of trade refers to an order to buy or sell a security right away. Keep in mind that the price at which the security last traded at won’t always be the price when the market order is executed. Therefore, market orders don’t ensure the execution price, but rather the order’s immediate execution.

Typically, market orders go through at or around the current bid for a sell order or at or near the ask price for a buy order.

Investors who want to buy or sell a stock without having to wait tend to prefer market orders. Despite not knowing the exact price of the trade, a market order increases the probability of the trade being executed. In addition, despite the fact that you can’t specify the trade price, your broker can execute a market order rather quickly.

This type of trade is best used when you want a quick execution no matter what, you only want to trade a limited amount shares, or you’re trading an easily sold stock that features a narrow bid-ask spread.

Limit Order

Also known as a pending order, limit orders refer to orders of when investors can buy or sell a stock at a specific price in the future. This means that if the stock doesn’t reach the specified price, the order won’t be filled.

Essentially, a limit order predetermines the highest and lowest point at which you’re willing to buy or sell the stock. Let’s say you want to buy a stock at $30 and enter a limit order for the said amount. This means you aren’t willing to pay anything over $30 to buy the security, though, you could always buy it for less than $30 that you specified in the order.

Here are four types of limit orders to consider:

  • Buy limit: A buy limit refers to an order to buy a security at a certain price or below. To improve the price, you need to set the limit order at or below the stock’s current market bid. Let’s say you want to buy shares of stock at $15 or below. After you submit a buy limit order with this specified price, the order will only go through if the stock’s price is $15 or lower.
  • Sell limit: Sell limits are orders to sell a stock at the set price or above. To improve the price, the sell limit order needs to be set at or above the stock’s current market ask. For example, let’s say you want to buy stock shares for no more than $20. After you submit a sell limit order, it means the order will only be executed if the stock is $20 or higher.
  • Buy stop: A buy stop order is an order to buy a stock at a price higher than the stock’s current market bid. As opposed to buy limit orders, buy stop orders are placed above the market. Once the stop level is reached, the order moves to a market or limit order.
  • Sell stop: Sell stop orders refer to an order to sell a stock at a price that’s lower than the current market price. When the sell stop price is reached, sell stop orders act like market orders. You can use a sell stop order to get out of a long trade.

Keep in mind that with both a buy stop and sell stop, the set price level (also known as the stop level), needs to be reached for the order to become active.

Overall, limit orders give you greater control over the trading prices when you buy or sell. This means that while you’re not guaranteed the stock trade, you can name your price with a limit order.

Other Stock Orders

Outside of market and limit orders, there are other restrictions and instructions you may encounter from brokers. While not all brokerages or platforms allow these orders, they’re still worth considering. Talk with your broker if you’re unable to use an order that you’re interested in. Here are some additional types of stock orders to consider:

  • Stop-Loss Order: Also known as a stop order, a stop-loss order is inactive until the stock passes a specific price. Once it does, it becomes active as a market order. For example, if a stop-loss sell order was placed on stock shares at $40 per share, the order will remain dormant until the stock price reaches or dips below $40. It’s worth noting that a stop order ensures an order execution, though not always at the stop order price.
  • Stop-Limit Order: A stop-limit order places a limit on the price when it executes. To enter this trade, you need to set two prices: the stop price and the limit price. When the stock reaches the stop price, it converts to a limit order. As opposed to a stock order, a stop-limit order ensures a price limit.
  • Immediate or Cancel: This order allows you to buy or sell a security with immediate execution. Anything unfilled gets canceled.
  • Good-Til-Canceled: A good-til-canceled order allows you to purchase or sell a stock. It’s in effect until the order is completed or canceled.
  • Fill or Kill: This is an order to purchase or sell a stock with immediate, complete execution. If it’s not executed, the order is canceled with no possibility of partial fulfillment.
  • Trailing Stop Order: With a trailing stop order, you set a stop price somewhere below the market price, along with a ‘trailing’ amount. When the market goes up, the stop price goes up in accordance with the trailing amount.
  • Take Profit: This limit order provides you with a price at which you should close an open position in order to make a profit.
  • All-Or-None: An all-or-none order allows you to purchase or sell a stock. It needs to be executed immediately or not at all.

Market Order Costs vs. Limit Order Costs

W hen it comes to market orders and limit orders, you face additional costs. More often than not, limit orders have higher commissions than market orders.

For example, let’s say a market order costs $5 and a limit order costs you $10. The stock you’re interested in is currently trading at $50 per share, and you want it for $49.80. When you place a market order to buy 10 shares of the stock, you end up paying $500 plus a commission of $5, which brings you to $505. With a limit order for 10 shares set at $49.80, you’re charged $498 plus a limit order commission of $10, costing you $508.

While you get the stock at a cheaper price point, you end up spending more in the long run since you have the added costs of the order. It’s also worth noting that you may not have the chance to buy if the stock continues to rise above the limit order.

Now that you know what stock orders are, consider which best complement your investment strategy. Be sure to consult with your broker to determine if the stock order you want to execute is available to you.

Author: Jason Bond

Jason taught himself to trade while working as a full-time gym teacher; his trading profits grew eventually allowed him to free himself of over $250,000 in student loans!

Now a multimillionaire and a highly skilled trader and trading coach, Over 30,000 people credit Jason with teaching them how to trade and find profitable trades. Jason specializes in both swing trades and in selling options using spread trades, which balance the risk of selling options. Jason is Co-Founder of RagingBull.com and the RagingBull.com Foundation which donates trading profits to charity. So far the foundation donated over $600,000 to charity.

The Nasdaq-100 continues to bleed lower, and right now.

Futures are testing another key support level at 11200, and if it breaks below that…

Then we could be headed much lower, as stops may be triggered and people start to dump their positions.

The S&P 500 and Russell 2000 tell a similar story. We’re around key levels in major indices, and it’s a major inflection point.

 Amidst this choppy price action, I’ve sat on my hands for the most part.

You see…

Patience Is A Virtue

Of course, that doesn’t mean I’m just sitting back and relaxing right now.

I’m continuing to monitor for a potential reversal here, and of course, I want to remain on the hunt for potential money-making opportunities.

That said, I want to show you how to identify potential opportunities by identifying relative strength in the market. You see, there are plenty of names bucking the trend…

And I want to keep those on my radar and see whether my favorite patterns show up in them.

Stocks Are Dipping, But I’m Not Too Worried

Sure, I want to wait and see how things shake out with some of the catalysts and what the market does today. However, that doesn’t mean I’m not out looking for opportunities.

One of my favorite tools to use not only in choppy environments but also in trending markets is the momentum hunter scanner. You see, it helps me identify which stocks are relatively strong against the market.

In other words, I want to try to find stocks that are running higher, while the market is tanking.

For example, First Solar Inc. (FSLR) reported earnings today and the stock was stronger than the overall market.

So that helps me put the pieces of the puzzle together. Since solar stocks have been hot, there may be a sympathy play here. In other words, FSLR may pull those stocks higher.

Other solar names that look interesting are Beam Global (BEEM), SPI Energy (SPI), Sunworks Inc. (SUNW) and VivoPower International (VVPR) to name a few.

BEEM has a bull flag / pennant and the stock didn’t break below that support level around $14, so I think it makes sense to keep this name on watch.

 

SPI has a fish hook pattern forming, and if it holds above this support level, I suspect buyers may step in and that could cause the stock to build momentum.

SUNW doesn’t have one of my favorite setups, but I think it makes sense to keep it on the radar.

 

 

Listen, in this market environment — I believe it’s key to remain patient to live to trade another day. The last thing you want to happen is to let your emotions get the best of you… and just buy random stocks thinking they’ll rebound.

Instead, it’s important to remain highly selective, and I believe my chart patterns can help you do that.

Allow me to show you how I utilize some of my favorite chart patterns to attack the market, and uncover momentum trading opportunities AHEAD of time.

You can discover my favorite patterns here.

Author: Jason Bond

Jason taught himself to trade while working as a full-time gym teacher; his trading profits grew eventually allowed him to free himself of over $250,000 in student loans!

Now a multimillionaire and a highly skilled trader and trading coach, Over 30,000 people credit Jason with teaching them how to trade and find profitable trades. Jason specializes in both swing trades and in selling options using spread trades, which balance the risk of selling options. Jason is Co-Founder of RagingBull.com and the RagingBull.com Foundation which donates trading profits to charity. So far the foundation donated over $600,000 to charity.

 

There’s a lot of uncertainty in the market…

And when there’s uncertainty, volatility picks up. While most traders will sit and stare at this price action and get shook, I look to exploit the inefficiencies.

Not only are there market-wide catalysts on the table, but it’s also earnings season — and that should juice the volatility premiums even more.

Listen, I’m all about teaching you different ways to attack the market — and today, I want to show you how to trade post-earnings and take advantage of the uptick in volatility.

I’ve got my eye set on a few names this week, and I want to show you what I’m watching in them.

Don’t Think Of Volatility As Your Enemy, Think Of It As Potential Opportunity

If you don’t already know, volatility is thought to be mean-reverting. In other words, when volatility spikes to extreme levels, there’s a good chance it’ll pull back. 

When it’s earnings season, I believe it’s the perfect opportunity to take advantage of a potential pullback in volatility. You see, it’s an observation that most elite options traders know about.

Ahead of earnings, there’s a lot of uncertainty — so it makes sense the options trade at a premium, in terms of volatility. What happens after an earnings announcement? There’s less uncertainty and the news is out.

What do you think happens to the volatility in the options?

They get sucked out, and that’s what I want to take advantage of.

So how does this all work?

Well, first and foremost, I want to hedge my position, while still having the ability to generate fast returns. So I want to look at bull puts after the news is out.

For example, Apple Inc. (AAPL) is set to report earnings on Thursday.

Since earnings can be pretty wacky, I’m going to wait until after the dust settles and look to either buy the dip or play the gap and go.

It’s helpful to keep an eye on key levels. For me, I’ll look at the 89- and 144-day exponential moving averages (EMAs), which is around $108 and $100, respectively. I figure those will be good areas of support.

If AAPL takes off, the 34- and 55-day EMAs look attractive as well for potential support levels. Those are $116 and $113, respectively.

So why is that so important?

Well, it helps with my strike price selection for when I sell a put spread. In other words, I may look to sell say the $100 puts and purchase the $95 puts to play for a bounce (if AAPL sells off). Not only will I be able to take advantage of the volatility, but I don’t necessarily need the stock to move to my favor.

It’s similar to if AAPL breaks out.

If the price action signals AAPL will run higher, then I can look around the shorter-term EMAs to select my strike price.

Of course, we’ll know how things will shake out on Friday morning(the day after the earnings announcement). 

There are plenty of major companies reporting earnings, and I believe my strategy will come in handy. For now, I’ll remain patient and wait until after the earnings announcement because it’s safer in my opinion. 

In this market environment, it helps to think of different ways to attack the market… and I believe bull puts can be advantageous right now.

In my next letter, I’ll show you different earnings plays on my radar and how to potentially take advantage of them.

 

Author: Jason Bond

Jason taught himself to trade while working as a full-time gym teacher; his trading profits grew eventually allowed him to free himself of over $250,000 in student loans!

Now a multimillionaire and a highly skilled trader and trading coach, Over 30,000 people credit Jason with teaching them how to trade and find profitable trades. Jason specializes in both swing trades and in selling options using spread trades, which balance the risk of selling options. Jason is Co-Founder of RagingBull.com and the RagingBull.com Foundation which donates trading profits to charity. So far the foundation donated over $600,000 to charity.