April 15, 2024


The Internet Generation

The Many Types of Stock Trades

Trade Order - Definition, Types, and Practical Examples


You’ll hear about the various types of trading options you may position with your online broker in this good basic stock exchange process tutorial, which is one of the tutorials to stock trading digitally.

There are two main types of stock orders

You’ll want to start selling stocks once you’ve picked a stockbroker. Until you do so, you can familiarise yourself with the 13 different forms of trade orders available online and the scenarios in which you can need them.

It’s possible that you won’t need any of these kinds of orders, but you never know. It’s beneficial to be mindful of the wide spectrum of options available to you.

The market

A market order is the shortest and most general form of stock transaction. When you place a market order, you’re saying you’re able to accept whatever price is offered to you when your order is fulfilled.

Assume you intend to purchase 100 Apple shares. If the stock is trading at $181 when you put the market order, don’t be shocked if the price you pay is slightly higher or lower, either $181.50 or $180.60.

Set a limit

When purchasing or selling a stock, a limit order enables you to choose the maximum price you are willing to pay or the minimum price you accept. The main distinction between a business order and a cap order is that the latter cannot be filled.

Assume you want to invest in U.S. Bancorp stock. You think the stock is already overvalued at $53.48 and don’t want to spend more than $51, so you put a maximum order that will execute at $51 or less. Your order can be filled if the stock drops to that level.

Before setting a limit request, you can weigh the following three factors:

It’s possible that the stock price would never decline (or rise) to the level you’ve set. As a consequence, your order may never be fulfilled.

Limit instructions are carried out in the sequence that they are received. The stock you choose to purchase (or sell) would likely surpass your cap price, but the trade will be canceled because the price fluctuated beyond (or below) the limit before you could complete the transaction. When citizens used to call their broker to position trading orders, this issue was much more prevalent than it is now for online trading.

Your order will be fulfilled at the limit price if the market price drops unexpectedly. Consider the following scenario: the bank’s CEO abruptly resigns, or any other negative news is released, and U.S. Bancorp’s stock declines to $45. Your order was filled when the stock’s price fell. You’ve made a $6 loss on your investment at https://www.webull.com/quote/etflist.