A market order does not specify a
price, it is executed at the best possible price available. A market order
can keep the customer from 'chasing' a market.
Limit Order:
The limit order is an order to buy
or sell at a designated price. Limit Orders to buy are placed below the
current price while limit orders to sell are placed above the current price.
Even thought you may see the market touch a limit price several times, this does
not guarantee or earn the customer a fill at that price. In most instances, the
market must trade BETTER than the limit price for the customer to get a fill.
Or Better:
The pit broker is obligated to get the best possible price for the customer.
Think of OB as a market order with a limit. If the price does not have an OB
next to it, and the market is considerably better, the pit broker may question
the runner to see if the order should have been a stop. They may return the
order for clarification, which could delay execution and possibly change the
results of the fill.
Market If Touched (MIT):
Buy MITs are placed below the current price and Sell MITs are placed above
the current price. An MIT order is similar to a limit order in that a specific
price is placed on the order. However, an MIT order becomes a market order once
the limit price is touched or passed through. An execution may be at, above, or
below the originally specified price.
Stop Order:
Stop orders can be used for three purposes:
- to minimize a loss on a long or short position
- to protect a profit on an existing long or short position, or
- to initiate a new long or short position.
A buy stop order is placed above the current market and is elected only when
the market trades at or above, or is bid at or above, the stop price. A
sell stop order is placed below the current market and is elected only when the
market trades at or below, or is offered at or below, the stop price. Once the
stop order is elected, the order is treated like a market order and will be
filled at the best possible price.
Stop Limit Orders:
A stop limit order lists two prices and is an attempt to gain more control
over the price at which your stop is filled. The first part of the order is
written like the above stop order. The second part of the order specifies a
limit price. This indicates that once your stop is triggered, you do not wish to
be filled beyond the limit price. Stop limit orders should usually not be used
when trying to exit a position.
Stop Close Only:
The stop price on a stop close only will only be triggered if the market
touches the stop during the close of trading. The disadvantage of this order is
a fast market in the last few minutes of trading may cause the order to be
filled at an undesirable price. It can, however, protect the customer from
getting filled during adverse price fluctuations during the course of the day.
Market On Opening (MOO):
This is an order that the customer wishes to be executed during the opening
range of trading at the best possible price obtainable within the opening range.
Market On Close (MOC):
This is an order that will be filled during the final minutes of trading at
whatever price is available.
Fill or Kill:
A Fill or Kill order instructs the floor broker to buy or sell at your
specified price and to immediately cancel the order if it is "unable"
to be filled.
Order Cancels Order (OCO):
This is a combination of two orders written on one order ticket. This
instructs the floor broker that once one side of the order is filled, the
remaining side of the order should be canceled. By placing both instructions on
one order, rather than two separate tickets, the customer eliminates the
possibility of a double fill.