Order (exchange)
[1] A market order may be split across multiple participants on the other side of the transaction, resulting in different prices for some of the shares.
It is the most basic of all orders and therefore, they incur the lowest of commissions, from both online and traditional brokers.
[3] Limit orders are used when the trader wishes to control price rather than certainty of execution.
For example, if a stock is asked for $86.41 (large size), a buy order with a limit of $90 can be filled right away.
Similarly, if a stock is bid $86.40, a sell order with a limit of $80 will be filled right away.
Two of the most common additional constraints are fill or kill (FOK) and all or none (AON).
Most markets have single-price auctions at the beginning ("open") and the end ("close") of regular trading.
[5][6][7] Optimal order routing is a difficult problem that cannot be addressed with the usual perfect market paradigm.
Liquidity needs to be modeled in a realistic way[8] if we are to understand such issues as optimal order routing and placement.
[9] The Order Protection (or Trade Through) Rule (Rule 611) was designed to improve intermarket price priority for quotations that are immediately and automatically accessible, but its role in predatory trading behavior has faced mounting controversy in the recent years.
Investors generally use a buy-stop order to limit a loss, or to protect a profit, on a stock that they have sold short.
Investors generally use a sell-stop order to limit a loss or to protect a profit on a stock that they own.
[10] Investors can also use stop loss orders to counter a behavioural bias called the Disposition Effect.
A buy-stop order is typically used to limit a loss (or to protect an existing profit) on a short sale.
This parameter is entered as a percentage change or actual specific amount of rise (or fall) in the security price.
For example, a trader has bought stock ABC at $10.00 and immediately places a trailing stop sell order to sell ABC with a $1.00 trailing stop (10% of its current price).
A trader can use a trailing stop order to lock the stop-loss amount and reduce the risk to your acceptable range without limiting your profitable potential.
To behave like a market maker, it is possible to use what are called peg orders.
Like a real market maker, the stepper: The conditions are: A mid-price order is an order whose limit price is continually set at the average of the "best bid" and "best offer" prices in the market.
For instance, the trader may wish to buy stock ABC at $10.00 then immediately try to sell it at $10.05 to gain the spread.
Any tick-sensitive instruction can be entered at the trader's option, for example buy on downtick, although these orders are rare.
In markets where short sales may only be executed on an uptick, a short–sell order is inherently tick-sensitive.
Simple limit orders generally get high priority, based on a first-come-first-served rule.
