Stock Orders

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Stock Orders

Stock Orders are a set of instructions, given to the stock broker, regarding buying or selling a stock.

There are five different types of stock orders that your broker will likely let you use.
1. Market Order
2. Limit Order
3. Stop Order
4. Stop-Limit Order
5. Trailing Stop Order

Market Order

A market order is a request to purchase or sell a stock at the current market price. Market orders are pretty much the standard stock purchase order. One thing to keep in mind with a market order is the fact that you don’t control how much you pay for your stock purchase or sale; the market does. This shortcoming can be met with a limit order.

Limit Order

This is an order that executes at a specific price that you set (or better) and can be open for a specific time period. While a limit order will prevent you from buying or selling your stock at a price that you don’t want, if the price is way off base, the order will never execute. It’s important to note that some brokers charge more for limit orders. Why? No execution means no commission.

Stop Order

This is a market order that is triggered once your stock reaches a specific target price, the stop price. Stop orders may also be called stop-loss orders, because they help investors put constraints on their losses.

Stop-Limit Order

This is identical to the stop order, except for the fact that a limit order is triggered once your stock reaches a specific target price. (Read more about stop-loss and stop-limit orders here.)

Trailing Stop

Basically, this is a stop order based on a percentage change in the market price.
When you put an order in to your broker, you can choose how long the order stays open. By default, orders are day orders, meaning that they are valid until the end of the trading day. Good-till-canceled orders remain open until you actually go in and cancel them.

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