CFDs And Different Order Types
The stock market is a place where various kinds of orders are executed in a day. In order to play an important part in daily trading, you would then be wise to become familiar with the actual different types of orders. The most effective individual to explain them is the stock broker. You may also find out about them in books, numerous content articles and also follow online tutorials.
Let us look at some of the most frequent types of orders:
1. The first type may be the 'day order' in which you clearly put down the name of the stock and the quantity you intend to trade for that stock. It can be either a buy or a sell order. This would be legitimate only for that particular day. This type of trading is followed by intra-day traders who don't want to carry positions for the next day and want to take advantage of the daily movements in a specific stock or shares. That is because the uncertainties with the movements in a particular stock as a result of trends within the global market and could be of a sharp nature and some traders do not want to consider that risk. If a specific order is not executed during the trade date, it gets automatically canceled and you would have to place a fresh order the following day. The key advantage with these types of orders is the fact that it adds a bit of discipline to your trading and you are not as likely to incur large losses. This form of trading will be for the conservative investor.
2. The next one is the market order which has a couple of variations. In the first open order situation, the best possible market price upon trade opening gets executed. Within the second closed order type, the best price within a few minutes of the market closing will become relevant on the trade.
3. Then we come to the stop orders as well as limit orders. These are usually implemented to ensure better precision within a distinct range of trading prices of a stock. The limit orders enable you to buy below a specific limit or sell at a price above the limit. You may also levy conditions like, 'Good for the day' or 'Valid till manually canceled'. This allows the internet investor to concentrate on other areas of a trade for instance research charting, trends in a share and so on. Stop orders will be the exact opposite of limit orders.
Let us look at some of the most frequent types of orders:
1. The first type may be the 'day order' in which you clearly put down the name of the stock and the quantity you intend to trade for that stock. It can be either a buy or a sell order. This would be legitimate only for that particular day. This type of trading is followed by intra-day traders who don't want to carry positions for the next day and want to take advantage of the daily movements in a specific stock or shares. That is because the uncertainties with the movements in a particular stock as a result of trends within the global market and could be of a sharp nature and some traders do not want to consider that risk. If a specific order is not executed during the trade date, it gets automatically canceled and you would have to place a fresh order the following day. The key advantage with these types of orders is the fact that it adds a bit of discipline to your trading and you are not as likely to incur large losses. This form of trading will be for the conservative investor.
2. The next one is the market order which has a couple of variations. In the first open order situation, the best possible market price upon trade opening gets executed. Within the second closed order type, the best price within a few minutes of the market closing will become relevant on the trade.
3. Then we come to the stop orders as well as limit orders. These are usually implemented to ensure better precision within a distinct range of trading prices of a stock. The limit orders enable you to buy below a specific limit or sell at a price above the limit. You may also levy conditions like, 'Good for the day' or 'Valid till manually canceled'. This allows the internet investor to concentrate on other areas of a trade for instance research charting, trends in a share and so on. Stop orders will be the exact opposite of limit orders.