types of orders

Market Order means that you are ready to purchase or sell at current market price of demand/ supply. Advantages of this order are obvious: you obtain almost immediate execution at the price which is different from the price of the last transaction. Thus, you need to use this order when the main goal is to obtain market position immediately – as a rule, to the prejudice of executing price. Disadvantages: in fact, you agree to any price suggested. Therefore, orders of this type are not recommended for illiquid markets.

Stop Order is the order which becomes market order after the market achieves required price. This order is applicable both for closing and opening positions. The main rule – the price for Buy Stop (stop order for purchasing) must be over the market price, the price for Sell Stop (stop order for selling) – is under the market price, otherwise order will be immediately executed as the market order. We must note that the slippage volume (the gap between stop price and the price of executing) has no restrictions in theory and can be significant for strong movements. At the same time there is a possibility of a positive slippage.

Limit Order is the order stating for a broker the maximum price at which you are ready to purchase or the minimum price at which you will be ready to sell. Please pay attention that purchasing price of the limit order must be under the market price, otherwise the order will be executed at the market. Thus, selling price of the order must be over the market price. For order execution at least one stock transaction must be registered at the price which is better than yours. Stop Limit Order represents combination of two order types: stop and limit orders. Executing algorithm: if prices reached the level of stop price, limit order is to be placed. Besides, the limit price can match or differ from stop price. As a rule, such orders are applied with the purpose of fixation of the slippage volume for stop orders. Such type of order is applied in order to fax slippage volume of stop orders. This order does not guarantee your transaction even if prices touched the level of stop price. Therefore, you are not recommended to use it while leaving position with the purpose of loss limitation (stop loss). In addition, not every broker accepts this type of trading order.

Market if Touched Order (MIT) — this order reminds limited order, but its execution does not require the transaction to be officially recognized which should be made at the price better than your limit price. As known, there is a stock queue for purchasing/ selling. Thus, even if prices touched your limit price you may miss transaction – ahead there are other members on the same price level as you. In order to exclude occurring of similar situations MIT is required. When prices touched your price, order becomes market order and you will get transaction. Don’t forget that while using this type of order you will face slippage which performs as requital for the guarantee of holding transaction. Also orders might be qualified at the time of performing. Day Order is valid till the end of the trading session. Good Till Cancelled is valid till you cancel it Good Till Date is valid till the date specified.