Ordertypes

Ordertypes

Ordering a stock or a future and the linked ordertype can make all the difference when you are daytrading. There are many ordertypes, and not all ordertypes are supported by all brokers.

Here is the list of most common orders and their meaning, and when to use them.

Ordertype	Description	When to use
Limit	A Limit order is an order to buy or sell a contract at a specified price. Use of a Limit order ensures that the customer will not receive an execution at a price less favorable than the limit price. Use of a Limit order, however, does not guarantee an execution.	When you want to buy or sell at a specific price. The price is normally lower for long orders and higher then the market for sell orders. If you want to buy at a higher price for instance to cash in your profit use a stop order. (also called a stop profit order)
Stop	A stop order will not be executed until the price is penetrated, but then becomes a market order.	When you want to buy at a certain price. in contrary to a limit order that might not be executed, a stop order becomes a market order and thus when the price is hit you will most likely be in the market.
Stop Limit	A stop limit order will not be executed until the price is penetrated, but then becomes a limit order at the price you have set, thus guaranteeing your price or a better one.	A Buy stop limit order can be attached to a short position, an thus acts a a stop loss. Suppose you sell at price 1000, and you want a 10 point stop, but not more enter a Stop limit sell order at 990.
Market	Will execute your order at the current market price.	If you want to buy immidiately at the current market price, use this order. Be carefull, It could be half point of the current price depending on the speed of execution of your broker.
Trailing Stop	A trailing stop for a sell order sets the stop price at a fixed amount below the market price. If the market price rises, the stop loss price rises by this amount, but if the stock price falls, the stop loss price remains the same. Reverse this for a buy trailing stop order.	When you have gained a certain profit position and want to protect your profit but also want to keep a certain distance to the actual market price so you do not go out right away. Example, after 5 points profit set a tree point trainling stop. This will guarantee that you lock n a profit of two points, but still have the potential to gain when the market moves in a direction favorable to your position.

Some examples:

The current price for a DAX future is 4000. You want to buy at 3995, sell again at 4000, and have a stop loss of 3 points. Enter a LIMIT buy order at 3995, a STOP LIMIT ORDER sell order at 3992, and a STOP SELL order at 4000. Never enter a LIMIT SELL order at 4000 too, because it might execute without you having bought the stock. Attach the stops to the limit order.

Order timing

Orders have to be timed. You have to indicated to your broker how long you want the order to last.

The possibilities are:

GTC	Good till cancelled. A Good-Til-Canceled order will continue to work within the ordering system and in the marketplace until it executes or is canceled by the customer.
GTD	Good till date. A Good-Til-Date order will continue to work within the ordering system and in the marketplace until it executes or the end of the given date is reached.
FOK	A FOK (Fill or Kill) order must execute as a complete order as soon as it becomes available on the market, otherwise the order is canceled. only for the options market.
GAT	A "good after time/date" order is held in the ordering system and sent to the exchange on the date and time you enter.