Order Entry

Pirate Trading University
Order Entry
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When you want to place an order to buy or sell, you will have a number of different choices. In this article, we will explain what these different choices are and what their purpose is. In this discussion, "offer" and "ask" mean exactly the same thing and can be used interchangeably.

There are three main terms used to describe how an order is handled:
Market Limit Stop

Order Types
Market	A market order is a buy or sell order to be executed immediately at current market prices. In a Market Order, you take the best price that is available from the market and have not control over the price that you get. You may get your order filled at different prices if the best bid/ask did not fill your entire order..
Limit	A limit order is an order to buy a security at not more, or sell at not less, than a specific price. Limit orders are placed when you are trying to get a better price than is available in the market. If the current Ask is 30.50 and you put in a BUY Limit Order of 30.25, then you are trying to get a .25 better price than is currently "on the offer". If the current Bid is 30.50 and you put in a SELL Limit Order of 30.75, then you are trying to get a .25 better price than is currently the "best bid". A Limit Order is AGAINST the direction of the market: If the market is rising, and you want to buy into the rise, the market would need to pull back to hit your limit order. A Limit Order to BUY that is placed ABOVE the best OFFER will be filled immediately at the best offer price (just like a Market Order). For a buy limit order to work, it needs to be placed BELOW the best offer. The reverse is true for a sell limit order. Not all limit orders are filled. All the losers will be filled because they will continue to run against you. Not all winners will be filled because the direction will not reverse long enough to get a fill in some of the winners. Other market participants will see your order when you post it and may alter their orders.
Stop	A Stop order is used to place an order in the same direction as the market. If the market price is 30.50 and you have a BUY stop order at 31.00 then the buy order will not be filled unless the market trades up to 31.00. The reverse it true for sell orders. Stop orders are typically used to buy into a breakout or to control the maximum allowable loss (see Stop Loss below). If you place a buy stop order below the best bid then you will be filled immediately (just like a market order). Stop orders are not visible to the market until the target price is reached.
Stop Market	A Stop Market order is a stop order done at the best market price. When the stop price is met, a market order is immediately sent to the exchange.
Stop Limit	A Stop Limit order can be used to buy with a stop order, but to only buy if you get the trigger price. If your Buy Stop Limit order is for 31.00 then a limit order to buy at 31.00 will go to the market when the market trades at or above 31.00.
Stop Loss	A Stop Loss is a risk management feature that limits how much you are willing lose on a position. If the market falls to your Stop Loss price then a market order will be sent to exit your position at the current best price. The risk of a live Stop Loss order is that you could get "shaken out" on a momentary spike in the price. The greatest risk of getting shaken out of a position is at the market open when prices often spike in the first few minutes.
Market at Close	A Market at Close(MOC) order gives you the closing price of a security. It must be submitted before the market closes and is performed by a Specialist on an exchange listed stock. This order type is not available on all exchanges or to all market players. There are some much less common variations of the MOC: market on open (MOO), limit on close (LOC), and limit on open (LOO). Traders do not normally use any of the order types (MOC, MOO,LOC,LOO).
Market if Touched	A Market if Touched(MIT) order si executed when the price is touched. Not all brokers offer this order type. It is used in a similar fashion to a limit order except that 1) Your entire order will be filled, 2) You may get a slightly worse price, and 3) Your order is not visible to other market participants.

Order Duration
GTC	A Good 'Til Cancelled Order is a persistent order that stays in force during normal trading hours and continues into each new day. It is not in foce during afterhours trading.
GTC+	GTC+ is like GTC except that it includes afterhours trading. Since after hours trading is by limit order only, you will need to use a stop limit order.
IOC	An Immediate-Or-Cancel order will be immediately executed or cancelled by the exchange. IOC orders allow for partial fills.
FOK	Fill-or-kill orders are usually limit orders that must be executed or cancelled immediately. Unlike IOC orders, FOK orders require the full quantity to be executed.

Advanced Orders
Trailing Stop	A trailing stop exit follows the price action, maintaining a constant (but one way) distance from the current price. If you are long and have a 1.50 trailing stop then as the price goes up, it will maintain that 1.50 distance except that it will only advance to capture profit -not decline.
OCO	"One Cancels Other" order allows you to have two orders in the market. When one order is filled, the other is cancelled. You could put an order in to go short below 20.00 and long above 30.00. If either one is filled then the other is cancelled. You could set up a fixed top loss and a trailing stop loss with an OCO order. The Fixed stop loss might be initially tighter than the trailing stop loss but as the price moves favorably, the trailing stop takes over. If either is filled then the other is cancelled.
OSO	Order Sends Order will send one or more staged orders if the main order is filled. You could have a stop loss, trailing stop loss, and profit target stop limit order all staged and then activated when the main order is filled. They could all then be pre-setup to be OCO orders so that if any is filled then the others are cancelled.