Orders Some of the simplest things A trader and investor must know it. Understanding it well will make you a better trader in many ways. When well placed, trading orders allow you to improve your performance In terms of profits and risk management.
In this article, we will look at the important types of orders in the market. We will also evaluate Some of the best strategies To be used when placing an order.
What are orders in trading?
demand is Simple process of executing trade In the market. Refers to When you place a buy or sell position For a specific asset such as a stock, currency or commodity.
The concept behind the commands is relatively simple. For example, when you go to a store and buy something, you simply give the seller money and receive the item. Similarly, in the financial market, when you execute an order, you simply give the broker your money, and then receive the asset in return.
The only difference is that You can do this electronically through an intermediary By clicking on a button to buy or sell an asset.
Why do you need to know trading orders
There are several reasons why you need to know more about orders as a day trader. First, through Understand the different types of commandsYou will know the best types of orders to fill certain market conditions.
Second, you’ll know The correct procedure to carry out the trade. Sometimes a lot of people lose their money by placing a buy position when they were supposed to open a sell position.
Third, learn more about trading orders It will introduce you to the concept of slippage. Slippage occurs when an order is executed at a price different from the price the trader placed.
Types of trading orders
On a large scale, there two main types Market requests: Market and pending orders.
a market demand Indicates the state in which the trader opens a file trade This is it It is executed at the current market price. For example, if Apple shares are trading at $100, a market order will trigger that trade to be executed at the specified price instantly.
a Pending Requeston the other side, Refers to conditional commands. For example, if Apple shares are trading at $100 and you expect a bullish signal when it goes up to $103, you can place a trade that gets executed when it moves up to that level.
market order
a Market ranking It is the most common type of request in the financial market. Indicates a situation in which a trade is executed at the current price. For example, if you start your trading platform and then buy a share, this is a market order as it will be executed immediately.
While market orders are the most common, They have their challenges. For example, they often slithering And they demand that the dealer stay in for him computer screen for more time.
Pending orders
A pending order, as above, refers to a situation in which you tell the broker which of them buy or sell advantage when that it The price reaches a certain level.
Therefore, these trades are considered conditional as they will only be executed when a certain condition is reached. There are two main types of pending orders: limit and stop.
Limit and stop commands
What are limit orders?
a limited demand It is a type of trade that instructs the broker to execute a trade above or below the current price. a buy limit It is when you tell the broker to execute a file A bullish trade is below the current price.
For example, in the chart below, we see Box shares are trading at $27.20. If you think the stock will drop to $25 and then resume the uptrend, you can place a buy limit there. In this case, the buy trade will only be executed if the trade moves to $25.
On the other hand, if you expect it to rise to $28 and then resume the downtrend, you can place a sell limit order there.
What are stop orders?
Stop orders, on the other hand, are types of orders Show in the direction of trade. For example, if a stock is trading at $10, you can place a sell stop at $9 if you expect it to continue declining.
Alternatively, you can place a buy stop at $11, if you expect it to continue rising. A good example of this is shown in the chart below.
Trailing stop order
Another type of trading order that you can place is known as a Trailing Stop order. it’s a command Similar to market demand. But, it has a Trailing Stop Loss order moves with trade To reduce potential losses.
For example, if you buy a stock at $10 and expect it to go up to $15, you can have a trailing stop order. In this case, if the stock subsequently declines, the original dividend will be recorded.
Related “ Important stop! They will keep your account
Benefits of pending orders
trade Experts believe that pending orders are usually better of market orders for several reasons.
Saves from sharp movements
First, you can use pending orders as a trading strategy, Especially during earnings. For example, suppose a stock is trading at $10 before posting its earnings in extended hours. In most cases, the arrow will open with a higher or lower sharpness.
Therefore, you can place a buy stop at $11 and a sell stop at $9. In this case you will do Earn money no matter which direction it opens.
Related “ How do you trade during profit season?
Avoid slipping
Second, pending orders are Good at anti slip, which occurs when a trade is executed at a different price. For example, you can place a buy trade at $10 and the broker executes it at $10.1.
For investors, this phenomenon does not exist, because their intention is to hold the asset for months or years. For the day trader – or scalper – every moment can make the difference between making a profit or not.
Save your time!
Third, with pending orders, You don’t need to spend all your time staring on your computer. You can place a trade and then go do your normal activities.
In this case, the transaction will be executed if the conditions are met.
Summary
In this article, we have looked at some of the most important things that traders should be aware of.
We have evaluated the different types of trading orders and the main benefits of using pending orders such as buy and sell stops and buy and sell limits.
Useful external resources
- What are the types of orders in the stock exchange? – kora