||* With a stop order, your trade will be executed only when the security you want to buy or sell reaches a particular price (the stop price). Once the stock has reached this price, a stop order essentially becomes a market order and is filled. For instance, if you own stock ABC, which currently trades at $20, and you place a stop order to sell it at $15, your order will only be filled once stock ABC drops below $15. Also known as a “stop-loss order”, this allows you to limit your losses. However, this type of order can also be used to guarantee profits. For example, assume that you bought stock XYZ at $10 per share and now the stock is trading at $20 per share. Placing a stop order at $15 will guarantee profits of approximately $5 per share, depending on how quickly the market order can be filled. * Stop orders are particularly advantageous to investors who are unable to monitor their stocks for a period of time, and brokerages may even set these stop orders for no charge.
||* A limit order is an order that sets the maximum or minimum at which you are willing to buy or sell a particular stock. For instance, if you want to buy stock ABC, which is trading at $12, you can set a limit order for $10. This guarantees that you will pay no more than $10 to buy this stock. Once the stock reaches $10 or less, you will automatically buy a predetermined amount of shares. On the other hand, if you own stock ABC and it is trading at $12, you could place a limit order to sell it at $15. This guarantees that the stock will be sold at $15 or more. * The primary advantage of a limit order is that it guarantees that the trade will be made at a particular price however, your brokerage will probably charge a higher a commission for the limit order, and it’s possible that your order will not be executed at all if the limit price is not reached.
||* An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will be executed at a specified price (or better) after a given stop price has been reached. Once the stop price is reached, the stop-limit order becomes a limit order to buy (or sell) at the limit price or better. * The primary benefit of a stop-limit order is that the trader has precise control over when the order should be filled. The downside, as with all limit orders, is that the trade is not guaranteed to be executed if the stock/commodity does not reach the stop price. A stop order is an order that becomes executable once a set price has been reached and is then filled at the current market price. A limit order is one that is at a certain price or better. By combining the two orders, the investor has much greater precision in executing the trade. Because a stop order is filled at the market price after the stop price has been hit, it’s possible that you could get a really bad fill in fast-moving markets. For example, let’s assume that ABC Inc. is trading at $40 and an investor wants to buy the stock once it begins to show some serious upward momentum. The investor has put in a stop-limit order to buy with the stop price at $45 and the limit price at $46. If the price of ABC Inc. moves above $45 stop price, the order is activated and turns into a limit order. As long as the order can be filled under $46 (the limit price), then the trade will be filled. If the stock gaps above $46, the order will not be filled.
|* Trailing Stop
||* A stop-loss order set at a percentage level below the market price – for a long position. The trailing stop price is adjusted as the price fluctuates. The trailing stop order can be placed as a trailing stop limit order, or a trailing stop market order. * This is such a useful tool, yet many fail to use it. Using a trailing stop allows you to let profits run while cutting losses at the same time.
|* Fill-or-Kill (FOK) –
||however, your brokerage will probably charge a higher a commission for the limit order, and it’s possible that your order will not be executed at all if the limit price is not reached.
|* Immediate or Cancel (IOC)
||* an order that must be filled immediately at the limit price or better. Allows partial filling vs FOK which doesn’t
|* All-or-None (AON) –
||* a buy/sell order that instructs the broker to fill entirely at once, or do not fill at all. Differs from FOK and IOC in that will not be cancelled if not filled immediately. Can be in addition into a Day Order or Good Till Cancelled (GTC) order. If Day Order, and limit cannot be satisfied, the order will be cancelled at the end of the day.