Types of Orders

INVESTMENT PORTFOLIO MANAGEMENT

INTRODUCTION
 An order is placed by the investor to
the broker to buy or sell stocks
 There are different types of orders
 Each order has some purpose and has
some distinct advantages
 The orders are to be executed by the
brokers
TYPES OF ORDERS
 Day Order
 Order only valid for the day when it is
given
 Week Order
 Order only valid for the week when it is
given
 Month Order
 Order only valid for the month when it is
given
TYPES OF ORDERS
 Fill or Kill Order
 The order to be filled immediately or is
considered cancel
 Good till Canceled Order
 The order that stands valid until it is
cancelled
LIMIT ORDER
 Default order type for all single stock
orders.
 The limit price for buy orders may be
placed below or above the current
market price.
 The limit price for sell orders may also
be placed below or above the current
market price for specific reasons.
 Limit orders will be filled at the limit
price or better, but are not guaranteed
MARKET ORDER
 Also known as "not held” order used to
guarantee an execution, but not
guarantee a price or time of
execution.
 The risk of market orders is that you
have no control over what the
execution price is.
STOP LOSS ORDER
 A Stop Loss order is used to close a position by
buying if the market rises or selling if the market
falls.
 The stop price for buy orders is placed above
the current market price. The stop price for sell
orders is placed below the current market price.
 A stop order turns into a market order when the
stop is triggered, so the final execution price or
time of a stop order is not guaranteed. The
same risks of market orders apply to stop
orders.
BUY STOP ORDER
 A Buy Stop Order is an order to buy a stock at a price above the
current market price. Once a stock's price trades at or above
the price you have specified, it becomes a Market Order to buy.
 Example: Suppose you are looking to buy 100 shares of
Intel (INTC) if the stock's price shows that it wants to go
up. Assume INTC is currently trading at $20 per share
and you believe that if the price rises to $22 or higher
there will be continued upward momentum. You place a
Buy Stop Order @ $22 on INTC.
 Suppose INTC then proceeds to trade up to $22. At that
time, your order would become a Market Order to buy
and your order would be filled at the next best available
price.
BUY STOP ORDER
 The main benefit of a Buy Stop Order is that
you will only purchase the stock IF the price
is showing upward momentum.
 But, if the stock price reaches your stop
price, the stock may change direction to the
downside and you may have just purchased
the stock at its high. Also, once your stop
price is reached and your order becomes a
Market Order to buy, you may be filled at a
price higher or lower than your stop price.
SELL STOP ORDER
 A Sell Stop Order is an order to sell a stock at a price below the
current market price. Once a stock's price trades at or below the
price you have specified, it becomes a Market Order to sell.
 Example: Suppose you are looking to sell 100 shares of
Intel (INTC) if the stock's price shows that it wants to go
down. Assume INTC is currently trading at $20 per share
and you believe that if the price falls to $18 or lower
there will be continued downward momentum. You place
a Sell Stop Order @ $18 on INTC.
 Suppose INTC then proceeds to trade down to $18. At
that time, your order would become a Market Order to
sell and your order would be filled at the next best
available price.
BUY STOP LIMIT ORDER

 An order that combines the features of a Buy Stop Order with those
of a limit order. A Buy Stop Limit Order will be executed at a
specified price (or lower) after a given stop price has been reached.
 Once the stop price is reached, the order becomes a Buy Limit Order,
filled at the limit price specified or lower.

Example: Suppose you are looking to buy 100 shares of

MicroSoft Corp (MSFT) if the stock's price shows some upward
momentum. Assume MSFT is currently trading at $30 per
share. You place a Buy Stop Limit Order for $33 on MSFT, with
a Limit (maximum you're willing to pay) at $33.50.
 Suppose MSFT then proceeds to trade up to $33. At that time,
your order would become a Buy Limit Order and your order
would be filled as long as the stock still trades below your
specified limit price of $33.50.
BUY STOP LIMIT ORDER
 The main benefit of a Buy Stop Limit Order is
that you have control over when your order
is filled and you have set a maximum price
you are willing to pay.
 As with all limit orders, there is no guarantee
that your order will be filled. If the stock price
does not reach your stop price, you will not
be filled. In addition, if the price hits your
stop price, but then trades above your limit
price, you will not be filled.
SELL STOP LIMIT ORDER
 A Sell Stop Limit Order is an order that combines the features
of a Sell Stop Order with those of a limit order. A Sell Stop
Limit Order will be executed at a specified price (or above) after
a given stop price has been reached.
 Once the stop price is reached, the order becomes a Sell Limit
Order, filled at the limit price specified or higher.
 Example: Suppose you own 100 shares of Bank of America
(BAC) and you are looking to sell them if the stock's price
falls a bit lower. Assume BAC is currently trading at $45
per share. You place a Sell Stop Limit Order for $41 on
BAC, with a Limit (minimum you're willing to accept) at
$40.
 Suppose BAC then proceeds to trade down to $41. At that
time, your order would become a Sell Limit Order and your
order would be filled at the next best available price as
long as the stock still trades above your specified limit
price of $40.
SELL STOP LIMIT ORDER
 The main benefit of a Sell Stop Limit Order is
that you have some control over when your sell
order will be filled and you have set a minimum
price you are willing to accept to sell your shares.
 As with all limit orders, there is no guarantee that
your order will be filled. If the stock price does
not reach your stop price, you will not be filled. In
addition, if the price hits your stop price, but
then trades below your limit price, you will not be
filled.
SELL SHORT STOP ORDER
 A Sell Short Stop Order is an order to Sell Short a stock at a price
below the current market price. Once a stock's price trades at or
below the price you have specified, it becomes a Market Order to
sell short.
 Please note that is very similar to a Sell Stop Order, the only
difference being a Sell Short Stop Order is used to ENTER a new
short position, while a Sell Stop Order is used to EXIT an existing
long position.
 Example: Suppose you want to Sell Short 100 shares of
Xerox Corp (XRX) if the price falls $2 more, since you
believe that this will trigger the beginning of a much larger
decline. Assume XRX is currently trading at $15 per share.
 You place a Sell Short Stop Order @ $13 on XRX. Suppose
XRX then proceeds to trade down to $13. At that time, your
order would then become a Market Order to Sell Short and
your order would be filled at the next best available price.
SELL SHORT STOP ORDER
 The main benefit of a Sell Short Stop Order is that you
will only sell short IF price is showing downward
momentum, which is what you want to see when
Selling Short. Sell Short Stop Orders are great for
entering new short positions in stocks that
break below levels of support.
 But, if the stock price reaches your stop price, the
stock may change direction to the upside and you
may have just sold short at its low. Also, once your
stop price is reached and your order becomes a
Market Order to Sell Short, you may be filled at a price
higher or lower than your stop price.
BUY TO COVER LIMIT ORDER
 A Buy to Cover Limit Order is an order used to attempt to
cover (close) a currently open short position at a price that is
lower than the current market price.
 Example: Suppose you currently hold 100 shares of Pfizer
(PFE) that you previously Sold Short @ $30 per share.
Assume it is currently trading at $25 per share. You would
like to exit the trade (cover) and take profit if it reaches
$22 or less.
 You place a Buy to Cover Limit Order @ $22 on 100 shares
of PFE. Now suppose the price trades down to $22. As
long as the price remains below $22 per share, your short
position would then be closed at the next best available
price that is $22 per share or lower, representing a profit
of at least $8 per share ($30-$22).
BUY TO COVER LIMIT ORDER
 The main benefit of a Buy to Cover Limit Order is that
you may be able to exit your short position at a price
that is lower than the current market price and you
are able to set a minimum amount you're willing to
exit at (your limit price). Buy to Cover Limit Orders
are great for taking profit on Short positions.
 But, if the stock's price reaches your limit price, but
then changes direction to the upside before your
order is filled, you will not exit the trade. Also, if the
price never reaches your limit price, you will still be
stuck with your short position.