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This article discusses the different types and variations of orders. The following discussion details (such as times) may vary from broker to broker and between the various exchanges. Check with your broker before depending on this information.


Bill S. asked in an email if I knew that stop loss orders were triggered on the bid price and not the last sale. Yes, that's the way they work, much to the dismay of traders.

Let's talk about order types.

Market Orders

A market order is an order to buy or sell securities at the best price available. Buy orders are filled at the asking price. Sell orders fill at the bid price.

Limit Orders

Limit orders specify that you will buy for no more or sell for no less than a chosen price.

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Buy Stop Orders

A buy stop instructs the broker to buy above the current market price. A stop order, when triggered, changes into a market order for execution. A buy stop is triggered when the asking price rises to or above the activation price.

Stop Loss Orders

A stop loss order is an instruction to sell at a price below the current market price. It is triggered on the bid price. In both a buy stop and stop loss orders, the stock does not need to actually trade at the activation price to trigger an order.

If price gaps around your stop, it could fill well beyond the activation price. This happens from time to time. I remember having a limit order to buy a stock at 20 and the stock gapped open at 18. My order filled at 18, and then dropped from there. Of course, that's better than seeing the order fill at 20 and drop to the same price. .

Stop Limit Orders

A stop limit order is a stop order that becomes a limit order once price reaches the specified stop price.

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All-or-none. This is a restriction on how your order is handled. AON prevents partial execution of an order. For example, if you have 1,000 shares to sell, it may be filled at various prices and share amounts until you sell them all. with AON specified, all 1,000 shares will fill at one price. Since it is a restricted order, AON orders have no standing in the trading order flow, meaning that price can trade at or below (when buying), at or above (when selling) with no right to execution.

Day Order

A day order expires at the end of the trading session if it hasn't been executed by the close.

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Do Not Reduce

Do not reduce orders apply to stocks that pay dividends. On good till canceled orders, the activation price is reduced on the ex-dividend date by the amount of the dividend. The do not reduce order prevents the price from being adjusted.

Good Till Canceled

Good till canceled (GTC) orders remain active until they are either filled or you cancel them. Many brokers have a time limit to keeping GTC orders open (such as 2 months). Thus, they can expire.

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Opening Cross

When the Nasdaq prepares to open trading, they use what's called the opening cross to set a stock's opening price. Orders placed within two minutes of the open cannot be canceled. I discovered this the hard way.

Market on Close

Market on close (MOC) orders are used when you want to buy a stock as close to the final close as you can get. Some brokers offer market on close orders. What's the problem with them? They can be rejected if placed after 3:01 (59 minutes before the close). I've not had that problem, but you must place your order at least 20 minutes before the close. Once you place your MOC order, you may not be able to cancel it after 3:40 (20 minutes before the close). If you would like to cancel the order, your broker will make a best effort to do so.

The price at which market on close order fills on Nasdaq may not be at the best bid or ask price due to the Closing Cross -- the way the exchange prices securities at the close.

Again, check with your broker to determine how they (mis)handle your orders.

-- Thomas Bulkowski

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Written by and copyright © 2005-2019 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information. Some pattern names are the registered trademarks of their respective owners. I used to get high on life, but lately I've build up a resistance.