Page 37 - Trading #101 Course – Part One: Trading Basics

TRADING #101 COURSE – PART ONE: TRADING BASICS /2017-10-06

buy or sell order to be executed immediately with no limits. If there are
willing sellers and buyers, market orders are filled. Market Orders are
used when certainty of execution is a priority over price of execution at
current market prices.

• Limit Order. A Buy Limit Order is an order to buy a security at not
more than a specific price. A Sell Limit Order is an order to sell a
security at not less than specific price. This gives the trader control
over the price at which the trade is executed; however, the order may
never be filled. Limit Orders are used when the trader wishes to
control price rather than certainty of execution.

• Cancel Order. An order that cancels an existing order already placed.

Conditional orders which have one or more conditions to be met prior to being
filled:

▪ Stop Order. A Buy Stop Order is an order to buy a security once the
price of the security has climbed above a specified stop price. A Buy
Stop Order is used to limit a loss (or to protect an existing profit) on a
short sale. Or, a Sell Stop Order is used to sell a security once the
price of the security has dropped below a specified stop price. On both
stop orders, when the specified stop price is reached, the stop order is
entered as a Market Order (no limit). This means the trade will
definitely be executed, but not necessarily at or near the stop price,
particularly when the order is placed into a fast-moving market, or if
there is insufficient liquidity available relative to the size of the order.

▪ Stop Limit Order. A Stop Limit Order becomes a limit order once the
specified stop price is attained or penetrated.

▪ Trailing Stop Order. A trailing stop for a Sell Trailing Stop order sets
the stop price at a fixed amount below the market price. If the market
price rises, the stop loss price rises by the increased amount, but if the
stock price falls, the stop loss price remains the same. The reverse is
true for a Buy Trailing Stop order.

▪ Bracket Order. This order is designed to help limit your loss and help
lock in a profit by “bracketing” an order with two opposite-side orders
using the same quantity as the original order.

▪ All or None (AON). This order will remain at the exchange until the
entire quantity is available to be filled.

▪ Market If Touched (MIT). An order to buy (or sell) an asset below (or
above) the market. This order is held in the system until the trigger
price is touched, and is then submitted as a Market Order.

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