Different Types Of Orders Used To Buy Or Sell A Stock

There's a lot more to trading stocks than just "buy" and "sell," and it's easy to be confused by all the types of orders you may have heard about. Placing orders correctly is probably one of the most important aspects of trading. It is vital that you understand and use the correct order when you trade. When placing an order with a broker, it's important to make sure you are placing your order properly. All orders are considered day orders and will expire the day you place it unless you specify that you want it to be a GTC order. (Good till canceled).

All trades are made up of separate orders, that are used together to make a complete trade. Every order can be a buy or a sell order, usually one order to enter the trade and one or more orders to exit the trade.

A single order is either a buy order or a sell order, and an order can be used either to enter a trade or to exit a trade. If a trade is entered with a buy order, then it will be exited with a sell order, and vice versa. For example, if you expect that stock price will go up, the simplest trade would be to place a buy order to enter the trade, and sell order to exit the trade. Contrary if you expect a drop in price, you will place a short sell order, and when you want to cover your shorts you will place a buy order.

It is important to remember that every order can be a buy order or a sell order. Here is a list of most used orders:

• Market Orders (MKT)
• Market On Open (MOO)
• Market On Close (MOC)
• Market If Touched (MIT)
• Limit Orders (LMT)
• Limit if Touched Orders (LIT)
• Stop Orders (STP)
• Stop Loss Order
• Stop Limit Order
• Trailing Stop Order
• Day Order
• Good Till Canceled (GTC)
• All or None (AON):
• Fill Or Kill (FOK)
• Spread Order

As you can see, this is huge amount of orders and if you want to trade properly, you will have to understand them all. In the next posts I will explain the main characteristics of each order with some examples of when they are used.