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ORDER
TYPES EXPLAINED
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All of our
Advisories state order instructions just as you would submit them to your
broker. However, it is important that you yourself always understand
the order you are submitting to your broker. After all, your trades
are indeed YOUR trades.
Most of the orders
used in our Advisories are either Stop Market
orders or Stop Limit orders. Occasionally
we will use simply a Limit order and
even more rarely we will use simply a Market
order. Let us explain these order types. Below you will find
the different types of orders used in our Advisories and examples of how
these are stated in the Order Instructions. You will also find an
explanation of exactly what each of these orders instructs your broker to
do.
Market Order
Examples:
Buy
at Market Open. This order instructs your broker to place an order
to Buy at the opening of trading at the then current Market price.
Sell to Close at Market Open.
This order instructs your broker to place an order to Sell to close your position at the
opening of trading at the then current Market price.
Sell Short at Market Open. This
order instructs your broker to place an order to Sell Short at the
opening of trading at the then current Market price.
Buy to Close at Market Open.
This order instructs your broker to place an order to Buy to close your short
position at the opening of trading at the then current Market price.
Note: Similar orders can be place that will Buy or Sell or Sell Short at
the Market at the close of trading hours also.
Limit Order
Examples:
Buy
at 37.45 Limit. This order instructs your broker to place an
order to Buy at a limit price of 37.45. The limit price
specifies that you are not willing to pay more than 37.45.
Sell to Close at 37.45 Limit.
This order instructs your broker to place an order to Sell to close your position at a
limit price of 37.45. The limit price specifies that you are not
willing to sell for less than 37.45.
Sell Short at 37.45 Limit.
This order instructs your broker to place an order to Sell Short at a limit price of
37.45. The limit price specifies that you are not willing to sell
short for less than 37.45.
Buy to Close at 37.45 Limit.
This order instructs your broker to place an order to Buy to close your short position
at a limit price of 37.45. The limit price specifies that
you are not willing to pay more than 37.45.
Stop
Market Order
Examples:
Buy
at 37.11 Stop Market. This order instructs your broker that
when the price of the stock trades at 37.11 they are to place an order
to Buy at the then current Market price.
Sell to Close at 37.11 Stop Market.
This order instructs your broker that when the price of the stock trades
at 37.11 they are to place an order to Sell to close your position at
the then current Market price.
Sell Short at 37.11 Stop Market. This
order instructs your broker that when the price of the stock trades at
37.11 they are to place an order to Sell Short at the then current
Market price.
Buy to Close at 37.11 Stop Market.
This order instructs your broker that when the price of the stock trades
at 37.11 they are to place an order to Buy to close your short
position at the then current Market price.
Stop
Limit Order
Examples:
Buy
at 37.11 Stop 37.45 Limit. This order instructs your broker
that when the price of the stock trades at 37.11 they are to place an
order to Buy at a limit price of 37.45. The limit price
specifies that you are not willing to pay more than 37.45.
Sell to Close at 37.11 Stop 36.75 Limit.
This order instructs your broker that when the price of the stock trades
at 37.11 they are to place an order to Sell to close your position at a
limit price of 36.75. The limit price specifies that you are not
willing to sell for less than 36.75.
Sell Short at 37.11 Stop 36.75 Limit.
This order instructs your broker that when the price of the stock trades
at 37.11 they are to place an order to Sell Short at a limit price of
36.75. The limit price specifies that you are not willing to sell
short for less than 36.75.
Buy to Close at 37.11 Stop 37.45 Limit.
This order instructs your broker that when the price of the stock trades
at 37.11 they are to place an order to Buy to close your short position
at a limit price of 37.45. The limit price specifies that
you are not willing to pay more than 37.45.
OSO
[One Sends the Other] and OCO [One Cancels the Other] Order
Examples:
Buy
at 37.11 Stop 37.45 Limit ... OSO Sell at 36.95 Stop Market
GTC.
This order instructs your broker to buy the stock if it trades at
or above 37.11, but to not pay more than 37.45. It also tells your
broker that IF this first order is filled, to then to send the second
order through which instructs the broker to sell the stock if it should
trade at or below 36.95.
Buy
at 37.11 Stop 37.45 Limit ... OSO [Sell at 36.95 Stop Market
GTC ... OCO ... Sell at 37.75 Limit].
This order is just like the one shown above except that the
second order sent is an OCO [one cancels the other] type order. In
this case, once you are filled by the first order, your second order
will instruct your broker to sell you out of the position if the stocks
trades at or below 36.95 OR if the stock trades at or above 37.75.
GTC
stands for Good 'Til Canceled
Examples:
Buy
at 37.11 Stop 37.45 Limit. This order instructs your broker
that when the price of the stock trades at 37.11 they are to place an
order to Buy at a limit price of 37.45. The limit price
specifies that you are not willing to pay more than 37.45. This
order is only active for the trading day.
Buy
at 37.11 Stop 37.45 Limit GTC. This order instructs your broker
that when the price of the stock trades at 37.11 they are to place an
order to Buy at a limit price of 37.45. The limit price
specifies that you are not willing to pay more than 37.45. This
order is only active until it is canceled by the client or by the
exchange which routinely cancels GTC orders after something like 30 days
or more.
In our Advisories
that are updated daily, we use Day orders for entries and we always use
GTC orders for Rev Exit Stop Orders. In our Advisories that are
updated weekly or longer we use GTC orders for both entries and exits as
well.
These orders may seem complicated but in fact, once you get used to
them, they are quite intuitive to use and using these more advanced
order types will drastically improve your trading and investment
success. We are more than glad to discuss this with you as we are
always available for our client subscribers.
Remember, all of our Client Subscribers are invited to contact us for any
assistance they would like. We believe in maintaining a personal
relationship with all of our Client Subscribers.
You may also wish to consider the brokers on onr Brokers
to Consider page and talk directly with them.
You may refer to
the SEC - Securities and Exchange Commission's website for more
information on order types.
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Financial Security
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Trading & Investment Advisory Services
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