What are the different types of orders and how do they work

 

There are several types of orders that can be placed in the financial markets, including the following:

1. Market orders: A market order is an order to buy or sell a security at the best available price. Market orders are typically executed quickly, but the actual price at which the order is filled may differ from the last-traded price or the current bid and ask prices.

2. Limit orders: A limit order is an order to buy or sell a security at a specific price or better. A buy limit order can only be filled at the limit price or lower, while a sell limit order can only be filled at the limit price or higher. Limit orders are not guaranteed to be filled and may only be partially filled.

3. Stop orders: A stop order, also known as a stop-loss order, is an order to buy or sell a security when its price reaches a certain level, known as the stop price. A buy stop order is placed above the current market price, while a sell stop order is placed below the current market price. When the stop price is reached, the stop order becomes a market order.

4. Stop-limit orders: A stop-limit order is an order to buy or sell a security at a specific price or better, after a stop price has been reached. Once the stop price is reached, the stop-limit order becomes a limit order and is filled at the specified price or better. If the security cannot be bought or sold at the specified price or better, the order is not filled.

5. Market-on-close orders: A market-on-close order is an order to buy or sell a security at the close of the market on the day the order is placed. Market-on-close orders are executed at the closing price or the last-traded price.

6. Good-til-cancelled orders: A good-til-cancelled (GTC) order is an order that remains in effect until it is either filled or cancelled by the trader. GTC orders are typically used for long-term investment strategies.

7. Immediate-or-cancel orders: An immediate-or-cancel (IOC) order is an order that must be either filled immediately or cancelled. Any portion of an IOC order that cannot be filled immediately is cancelled.

I hope this helps!