Market Orders

An order at the market means you will immediately accept the current market price. This price may not be currently displayed, as trades are queued up in order of receipt and thus vulnerable to a price change between placement and execution. Buy orders are filled at the current ask price of sellers; sell orders at the current bid of buyers. If the market is closed when you place a market order, it will be executed as soon as possible once the market reopens. Market orders are guaranteed to execute.

Stop Orders

These orders are triggered by price movements. A stop order converts to a market order when a specified price is reached. For instance, if your stock is currently at $22 a share and your stop order is set for $20, your shares are guaranteed to sell at the market as soon as the current price reaches $20. A stop limit order is similar, except that it is converted into a limit order when triggered. In the same example, your order would become a limit order at $20, which then becomes the lowest price you will accept. A stop limit order may not execute even if the trigger price is reached if the stock continues falling below your limit.

Trailing Stop Orders

These are similar to stop orders, except the price trigger occurs when prices move a certain number of points or a certain percentage from the current price. If prices rise, your trailing stop price rises with it. For example, a 10-percent trailing stop will become a market order whenever your stock retreats 10 percent from the highest price it reached after you have placed your order. In this way, you can ride a rising stock price and still have downside protection.

Order Terms

References

Resources

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