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 Types of Brokerage Orders The brokerage trade cycle begins with an order to buy or sell marketable securities. This order is generally communicated by the investor to either his or her stock broker or directly into the firm’s trading system via the internet or some other computer based trading application. The type of order entered and current market conditions affect whether or not the order will be executed. There are several different types of orders that the client can enter:
A Day Order is an order to buy or sell securities at a specified price on the current day only. If at the close of trading the order has not been executed that order will expire, that is, it is automatically canceled. A Good-Til-Cancel or GTC Order is an order to buy or sell securities at a specified price that does not expire. The order remains in force until either executed or canceled by the investor. A market order is any order to buy or sell securities at the current market price. Market orders are routed to the appropriate exchange or market and are generally executed immediately. A Stop Order is an order to buy or sell securities at the current market price only after the security has traded at a certain specified level – the Stop Price. Once the Stop Price has been reached the Stop Order becomes a market order. If the security never trades at the specified Stop Price the trade will not be executed. A Stop Order can be entered as a Day Order, GTC Order or other time-limited order type. A Limit Order is an order to buy or sell securities at a specified price or better. The broker will only execute the order if the execution price is the Limit Price or at a price that is better for the customer than the specified Limit Price. A Limit Order can be entered as a Day Order, GTC Order or other time-limited order type. A Stop Limit Order is a combination of a Stop Order and a Limit Order. A Stop-Limit Order is an order to buy or sell securities at a specified price or better, but only after a given Stop Price has been reached or passed. In other words, a Stop Limit Order is a Stop Order that turns into a Limit Order when the Stop Price is reached. An All or None order is an order to buy or sell a specified number of securities at a specified price. The order specifies that no partial transactions are to be executed. If the entire order cannot be executed at the same time, then none of the order is to be executed. The order remains in force until such time that it is either executed or canceled by the investor. A Fill or Kill order is an order to buy or sell a specified number of securities at a specified price. The order specifies that no partial transactions are to be executed. If the entire order cannot be executed immediately the order is canceled or ‘killed’. |
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