Different Order Types
Trading in the stock market has changed dramatically over the years. Back in the day, there was no online trading. You would need to call your broker to place trades. Trades were not automated like they are today. With the advent of computers and then the internet, so many more features are available to us as traders.
As computers and internet usage became more commonplace, trading changed for the better for individual traders. Commission costs went down dramatically. Information is readily available at our fingertips. One big change is in the orders that we place.
Instead of the basic market or limit orders, you now can place all sorts of complex or advanced orders. Without computers, orders were manually intensive so the complex orders just couldn’t be done. Now, brokers are coming out with all types of complex orders that a trader can choose from. Advanced orders will differ according to the broker you use.
One basic advanced order is a contingent order. This order is placed on certain conditions being met. You can place an option order contingent on the underlying stock being at a certain price or a stock order executing contingent on another stock being at a certain price.
Another order type is a trigger order, where one order executed will then trigger another order. You can have one cancels other orders where 2 orders are in place. Whichever order executes first, the other is cancelled. You are now seeing orders that you can place based on a specific time or within a certain period of time.
As traders become more sophisticated and require more complex orders, brokers are delivering the capability. Check with your broker on the different order types you can place. If you do not understand how the order works, ask them. A lot of brokers will provide tutorials on the different order types.
No comments yet.