Order types and order additions
Order types and order completions are useful when placing an order, so that an order can be executed and completed correctly. It is possible to automatically react to certain market fluctuations with the different order types. An order can also be further refined by means of a certain order completion.
What are the main order types?
A ‘Market order’
The market order is one of the simplest types of orders and is very common. This is partly due to its high user-friendliness and cheap possibilities. By means of a market order you can ask the broker to buy your security at very short notice (best bid) or to sell it (best sell). The market value has no share in this case.
A ‘Limit order’
The limit order is the opposite of a market order. A value is set in advance, the limit order may not be above or below. There are two different types of limit orders: a buy limit order and a sell limit order. With the first variant, the security may not be bought until a certain value is reached. With the second variant, the security must be sold at a certain value.
A ‘Stop order’
For order types such as a stop loss order or a stop buy order, we have an umbrella term: stop order. This means that when a certain stop price is set for a stop order, the security is sold or bought when it is exceeded.
A ‘Stop loss order’
A stop loss order sets a price lower limit. The order is executed at the next tradable time, when the lower limit is reached. When prices collapse, a stop loss order can cause significant losses.
A ‘Stop buy order’
A stop buy order is the opposite of a stop loss order; an upper limit is set, above which the security is purchased. Officially, this type of order is called a start buy order.
Een ‘One Cancels Other/OCO order’
The OCO order is a combination of a limit order and a stop order. This means that there is both a fixed stop price and a fixed price value. When one of the two is complete, the other order becomes redundant. The price value then cancels the stop price, or vice versa. The biggest advantage of an OCO order is that the price and price of the product do not require constant attention.
An ‘If done order’
In an if done order there is both a sell option and a buy option. A second order is automatically executed, while in an OCO order orders are often excluded to cancel each other out.
What are order additions?
Order additions ensure that it becomes clear what the buying or selling strategy is. Also, order additions determine the conditions and boundaries of the situation, so that it is clear what a certain order entails.
Een ‘Fill or Kill Order/Immediate-or-cancel Order’
With this type of order, it must be determined that an assignment must have complete execution. This is the case with order options, which means that the assignment is only executed when everything is complete. Here, there is no possibility for partial execution. An immediate-or-cancel, or IOC, is an order that must be executed immediately. If that is not possible, the order must be deleted. With an IOC, however, partial execution is possible.
The maximum validity of an order
The duration of the valid order or an order option is equal to the maximum validity of an order. It means that the order will be valid between 2 and 10 months. You also have ‘Ultimo’ (the order is then valid for 12 months) and the order ‘Good till canceled’ (the order remains valid, until it is withdrawn).
A ‘Market-to-limit order’
With this order type, the execution takes place with the next market order. When a Market-to-limit order is executed in parts, a limit order is automatically added to the open part. The original order concerns the value of the limit. The useful thing about this is that you can ensure that the different partial executions do not have excessive price values. You then retain control over different parts.
What does ‘Market on close’ mean?
This type of order is deliberately executed at the end of the trading day and is a specific type of market order.
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