Different types of trading orders can be either categorised as carrying forward or intraday trading orders. In intraday trading, the position is done and dusted within the same trading day. Whereas in carry forward trade, positions are either carried forward on the next day or the delivery is taken.
In this article, we will discuss some significant types of trading orders.
A market order is one of the most direct and straightforward trading orders. You can either buy or sell an asset or security at an optimal price at the current market conditions in a market order.
To be more precise, a market order will execute the buying or selling at the best price that is available in the market at that time.
The buyer or seller does not hold on to the price, but the order is sure to get executed.
In a limit order, a trader can set a price to buy or sell a security. It is different from market order in the sense that a trader does not have any control over the price in a market order. But in a limit order, a trader can set a price at which the order shall be executed.
The trader will set a limit price, and the order will be processed at that particular price or less. And if the trader sets a price to sell the security, it will be sold at that price or a higher price for that matter.
This type of trading order can be reasonably put to use during highly volatile market conditions to keep control of the prices.
This type of trading order is one of the most crucial kinds to limit losses and mitigate the risks. A trader can exit a trade in a stop-loss when the limit of the set loss or the set price is reached. A trader can be saved from drastic losses if the price moves against the trade by placing a stop-loss order. This order is executed at the market price.
Stop-loss market order
A stop-loss market order is executed when a stop-loss is triggered, and the order is placed at the price, which is prevalent in the market. Here, one has only to mention a trigger price. Once the trigger price is attained, then the order is processed to be executed.
Stop-loss limit order
A Stop-loss limit order is similar to a stop-loss order, but it is not processed at the market price. It gets executed at the limit price set by the trader. Here, the trader has to develop both the trigger and the limit price.
Aftermarket order (AMO)
As the name suggests, this kind of market order is placed beyond the market hours. Typically, most markets end by 3:30 pm. But one cannot place an aftermarket order at any time beyond the market hours. Usually, a time interval is specified by brokers to put an aftermarket order.
In a bracket order, three orders are combined as one. A trader can enter a new position with a stop-loss and a target price. All limit orders can be bracket orders. One condition is that the target and stop-loss have to be in absolute points like1,2,5,10, etc.
A cover order has a stop-loss order and a market order connected to it. At first, a market order is executed, and after that, the stop loss market order is completed. One cannot cancel the stop-loss order as both are interconnected. In case of a more buoyant market change, an order can be altered to the last trading price or LTP.
Orders based on the duration of time
Other trading orders are based on the duration of time for which they are implemented or can be implemented. Such orders include:
- Good for day order: This order will stay valid till the end of the trading session.
- Good till day order: This kind of order can be kept alive for a few days.
- Immediate cancel order: Such orders will be processed immediately, and if not, they would be cancelled.
In the orders mentioned above, a ‘cover order’, ‘aftermarket order’, and ‘bundle order’ are complex kings of trading orders that require practice and precision to be processed and executed correctly. They combine two or more orders in them, which makes them a bit challenging for new traders.
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