About 80–90% of the volume occurs automatically in the American market, compared to only 50–60% of the volume in India. However, it still has a sizable market share. The majority of larger businesses or traders with large positions place these automated orders, which are algorithm-based. Given that they do not need to constantly check the prices, as they would have in the past, margin traders also have a variety of instruments at their disposal that they may use to improve the execution of their Stock Market orders.
Stock Market order definition: An order – essentially a buy or sell instruction – is the fundamental trading unit of a securities market. An online order simply consists of instructions to an investing platform like Stockal to purchase or sell a security on your behalf. However, before you can start buying and selling stocks, it could help to understand the different order types in stock market you have at your disposal.
When trading extremely volatile equities or in a market that moves quickly, the necessity of orders is very important since swift action can mean the difference between a successful and a failing position. It is crucial to comprehend trade orders in addition to the conventional “buy” and “sell” orders. Read on to know more about the essential kinds of stock orders available on Stockal, and how they can better your investing strategy.
Bid Price or Ask Price
The term “bid” refers to the highest price a buyer will pay to buy a specified number of shares of a stock at any given time. The term “ask” refers to the lowest price at which a seller will sell the stock. The bid price will almost always be lower than the ask or “offer,” price. In simple terms, if you are buying a stock, you pay the ask price. If you sell a stock, you receive the bid price. The difference between the two prices is called the bid-ask spread.
Last Trade Price
Last Traded Price is the price at which the last trade happens between a buyer and seller of a particular stock.
Types of Stock Market orders
Every investor should know the key order types in Stock Market are market order, limit order, stop order, market-if-touched order and Good-Till-Triggered apart from others.
- Market Orders
A market order is a popular tool among investors who want to buy /sell stocks or ETFs immediately during market hours. They are submitted immediately and carry the highest priority. Provided there is sufficient liquidity to fulfil the order, customers can expect very fast execution.
Current market prices are not constant and subject to change. This is because in fast-moving and volatile markets, the bid or ask the customer sees when placing the trade is an indicative price only, and the actual executed price may differ.
Market Hours: 9:30AM EDT – 4:00 PM EDT
- Limit Orders
What is limit orders in stock trading? Limit Order, as the name suggests, is where you define the price of the stock to buy or sell. The transaction (buy/sell) gets executed only when the price of the stock reaches the price defined by you. They won’t execute at all if the prices don’t reach the limit set. In other words, a limit order simply sets the maximum or minimum price at which you are willing to buy or sell a stock. In effect, this means that the order will not be filled if the price does not reach this level. Buy orders are created with a price below the current ask, and sell orders are created with a price above the current bid.
For example, if you wanted to buy a stock on Stockal at $10, you could simply enter a limit order for this amount. This means that you would only pay $10 or less for that particular stock. Similarly, if you want to sell a stock at $10, the execution will happen when the stock touches a minimum of $10. This means you can receive $10 or more under limited order.
To execute the limit order, the order for the quantity and the specified price is sent to the exchange or the market maker to be paired with a buyer or seller willing to transact at that price.
Limit orders will expire after 90 days from the date of creation if not executed. It’s important to note that because limited orders need to rest in an order book at a market maker, they accept whole-share quantities only, i.e., Fractional quantities are not accepted.
- Stop Limit Orders
What is a Stop-Limit Order? An ongoing order to sell a share or ETF if the market reaches a specified level is known as a stop-market order. It is designed to shield you from lost revenue if the market shifts too far against you. In the stock market, there can be various order types for buying or selling, but no deal happens until the price reaches that trigger. The stop order turns into a market order when the price has been reached and is carried out at the following best price.
A stop order is also referred to as a stop-loss order. A purchase stop order is placed at a limit price greater than the going market rate. Investors typically are using a buy-stop order to try and protect their gains or reduce losses on stocks they had sold short. To create a new long position, this might be utilised in the reciprocal fashion. At a stop price lower than the going market rate, a sell stop order is placed.
Three important things to note about Stop Orders:
- When Stop Orders are placed, a check is done to ensure the customer has the shares to sell.
- Once a Stop Order is submitted and accepted, the customer must maintain and update the Sell Stop Order to reflect any changes in the underlying position.
- When will the order be triggered to be executed?
Buy stop Order: If last Trade price >= trigger price
Sell stop Order: If last Trade price <= trigger price
So, if you would like to trigger the buy order when the price is going up or sell order when prices are going down and limit your loss, use the STOP order.
- Market-if-touched Orders
A Market-if-touched or MIT order is a form of order that will be filled each time the investor-set price is even momentarily touched. A price is established by the investor, and if it is met, the MIT order turns into a market order and is executed at the subsequent best price.
In contrast to limit orders, market-if-touched (MIT) orders don’t guarantee a price. This speeds up their execution while enabling investors to specify target prices instead of purchasing at the going rate. To put it another way, an MIT order enables you to sell or buy an ETF or stock at a specified price without keeping an eye on the market.
These many order types on the stock market demand both a volume (or dollar value) and a price, just like limit orders. When fractional orders are desired, they might be thought of as an alternative to limit orders.
When will the order be triggered to be executed?
Buy market-if-touched: If ask <= trigger price
Sell market-if-touched: If bid >= trigger price
So, if you would like to trigger the buy order when the price is going down or sell order when prices are going up and limit your loss, use the market-if-touched order.
- Robo Order
In intraday trading, a Robo order would be a multi-leg order that enables you to place two additional Stock Market orders along with the initial order. This order form can be used to mitigate risk at a trigger value and book profits at predetermined target prices. Both buy or sell orders may be placed using Robo orders. The Robo order includes a special feature that allows the client to reduce losses and maximize profits on each trade by trailing stop-losses.
- Intraday Order
Before the closing of the market, shares can be purchased and sold through intraday orders. Intraday trading refers to transactions that are completed before the market closes and result in no change in the ownership of any shares. Day trading was once thought to be the sole purview of financial institutions and professional dealers. However, the acceptance of leverage trading and computerized trading has changed in the modern era.
- Immediate or Cancel Order
An order to purchase or sell a security that seeks to execute all or a portion of it immediately and afterwards cancels any unfilled portions is known as an instant or cancel order (IOC). An IOC order is one of various “duration” or “time in force” orders that traders can use to determine the length of time the order is active in the market and the circumstances under which the order is canceled.
When placing a large order, investors frequently employ IOC orders to keep from having it completed at a variety of rates. Any portion of an IOC order that doesn’t fill right away is automatically canceled. Take into consideration, for instance, that a client places an IOC order to buy 5,000 shares of a corporation. Any non-purchased part of the 5,000 shares is automatically canceled. An IOC order can help traders who trade multiple stocks during the day reduce the likelihood that they will forget to manually cancel the order at the close.
- GTT Order
You can use a GTT (Good Till Trigger) order to place either buy or sell transactions at a set limit price. These Stock Market orders are carried out if the stock’s market price reaches the trigger price, generally known as the price you set, before the GTT order lapses. GTT orders remain valid for one year.
A GTT transaction is a “limit order” with a delivery or margin product type as an option. GTT orders cannot be placed for the intraday type of product. GTT Stock Market orders can also be placed in the derivative markets. In this situation, the GTT order would be carried over and will expire on the contract’s expiration date.
- GTC Order
You can set this as a deadline for different Stock Market orders. If you don’t elect to cancel an order, it will remain in effect until then. Brokers frequently limit how long you may keep an order active to 90 days (or open).
- Intraday Day Order
If a time duration for expiry is not specified in the GTC directive, the order will typically be reset to a day order. This means that the order will be canceled at the close of business. If it has not been transacted, you must re enter it the next trading day (filled).
- All Or None Order
This type of order is quite important for those who buy penny stocks. You are assured to either get everything you purchased or nothing at all when you place an all-or-nothing order.
This is frequently problematic if the order has a limit or the stock is incredibly scarce. If you file a request to buy 2,000 stocks of XYZ but only 1,000 are currently being sold, an all-or-none restriction prevents your purchase from being fulfilled until at least 2,000 shares at your desired price are available. Without an all-or-none condition, your 2,000 share order could only be partly replaced for 1,000 shares.
How can I use all of these order kinds for effective investing, then?
Despite the fact that they aren’t close to the screen, investors can still receive the price they want (when buying or selling) and profit from price spikes or falls. Investors thereby receive the desired rate, amount, and timing of the deal with the necessary efficiency (lower impact cost).
The Bottom Line
Understanding the distinction between a market and limit order is essential for individual investors. The order form is also determined by your investment strategy, and there are instances when either of them will be more suited. Since a market order is less expensive and the investment choice is based on factors that will pan out over months or years, the current market value is less important to a long-term investor. A limit order to purchase in conjunction with a stop-loss term of selling is typically the minimum needed for putting up a trade when a trader is attempting to respond on a shortened period of trend in the graphs and is consequently much more aware of the market rate paid.
At Stockal, we are always looking out to add features to our platform to improve it and give you an exchange-like investing experience. Do make an effort to understand and leverage these different order types in stock market so that you can benefit from the extended trading hours now available to you. Choosing the right order type can help you maximize your profits in the stock market.
What are the different order types in stocks?
Market Stock Market orders, stop-loss Stock Market orders, and limit Stock Market orders are the three most typical different order types in Stock Market.
What are Stock Market Order Types?
Different order types in the Stock Market could be utilized to trade more successfully depending on your trading style.
- When a market order is placed, shares are bought (or sold) at the current market price until the order is satisfied.
- A limit order defines a price where the order should be filled, but if the limits are set excessively high or low, there is no assurance that the entire order will trade.
- Stop order, a kind of market order is frequently used to protect against greater losses or to seal in profits because they are activated when a stock rises above or below a specific level.
What are the different order types available on Stockal?
Stockal has a maximum utilization for different order types in Stock Market so you won’t miss any actions when focusing on something else.