Order Types Explained

Market Orders

A market order lets you buy or sell a security at the prevailing market price. When you place an order during normal market hours (9:30 AM to 4:00 PM ET), a market order typically executes within seconds. When you place a market order during non-market hours, we'll enter it when the market opens, so the order executes as soon as possible.

Limit Orders

A limit order allows you to specify the maximum amount you are willing to pay for a security (when you buy) or the minimum amount you are willing receive for a security (when you sell).

Examples:

  • Buy Limit Orders: Let's say you want to buy a security for $10.00 or less. You can enter a limit price at $10.00, and we'll only purchase the security if it trades at $10.00 or less. If the security trades above the limit price, the buy order will not execute. Typically, the limit price for a buy order is placed at or below the current Ask price.
  • Sell Limit Orders: Let's say you want to sell a security for $20.00 or more. You can enter a limit price at $20.00, and we'll only sell the security if it trades at $20.00 or more. If the security trades below the limit price, the sell order will not execute. Typically, the limit price for a sell order is placed at or above the current Bid price.

Important: It is possible that a limit order won't fill in a single day. When this happens, your limit order may partially fill over multiple days, with transaction costs for each day a fill occurs. Learn more about partially filled orders.

Stop-Loss Orders

A stop-loss order can help you limit your losses. If the market price reaches or crosses through the Stop price, your order is sent to the exchange as a market order.

Example:

  • Sell Stop-Loss: When you place a Sell Stop-Loss order, you create a "floor" for your position. Let's say you have a security that is trading at $50 and you'd like to sell it if the price reaches $48.00. You can place a Stop-Loss order and enter a Stop Price of $48.00. If the security reaches $48, the order triggers and becomes a market order. You'll get the current price available for the security under the prevailing market conditions.
  • Buy Stop-Loss (This order type is only available for closing covered calls): When you place a Buy Stop-Loss order, you create a "ceiling" for your position. Let's say you have an option contract that is trading at $2.00 per contract and you'd like to Buy to Close if the price reaches $2.10. You can place a Stop-Loss order and enter a Stop Price of $2.10. If the contract price reaches $2.10, the order triggers and becomes a market order. You'll get the current price available for the security under the prevailing market conditions.

Criteria:

  • Sell Orders: The Stop Price must be entered at least $0.01 below the current Bid Price.
  • Buy Orders: The Stop Price must be entered at least $0.01 above the current Ask Price.

Stop-Limit Orders

A Stop-Limit order combines a Stop-Loss order with a Limit Order. To place a Stop-Limit order, you enter two prices: a Stop Price and a Limit Price. If the market reaches or goes through the Stop Price, your order becomes a Limit Order.

Examples:

  • Sell Stop-Limit: Let's say a security is currently trading at $30.00. You'd like to sell the security if it reaches or goes below $29.00, but only if the security can be sold for $28.00 or more. You can place a Stop-Limit order by setting the Stop Price to $29.00 and the Limit Price to $28.00. If the security reaches or goes below $29.00, your order becomes a limit order with a Limit Price of $28.00.
  • Buy Stop-Limit (This order type is only available for closing covered calls): Let's say an options contract is currently trading at $5.00. You'd like to buy the contract if it reaches or goes above $5.50 per contract, but only if the contract can be bought for $5.60 or less. You can place a Buy-Stop Limit order by setting the Stop Price to $5.50 and the Limit Price to $5.60. If the contract reaches or goes above $5.50, your order becomes a limit order with a Limit Price of $5.60.

Criteria:

  • Sell Orders: The Stop Price must be entered at least $0.01 below the current Bid Price and the Limit Price must be equal to or less than the Stop Price.
  • Buy Orders: The Stop Price must be entered at least $0.01 above the current Ask Price and the Limit Price must be equal to or greater than the Stop Price.

Market on Close Orders

A Market on Close order allows you to place a market order that executes near the closing price of the day.

Notice: Market on Close orders cannot be placed or canceled within the last 20 minutes of the market session or when the market is closed.

Trailing Stops Explained

Trailing Stops can be very confusing to understand at first... don't worry – you've come to the right place!

Important: Trailing stop orders involve unique risks. By using our trailing stop service, you acknowledge that you have read, understand, and agree to the Trailing Stops Terms and Conditions.

What is a trailing stop order?

A trailing stop order is a special kind of sell stop order. Sell stop orders let you say, "If the bid price falls to my trigger price, allow my sell order to execute on an exchange." The key difference between a traditional stop order and a trailing stop order is that the trigger price in a stop order stays the same as when you enter it, and the trigger price for a trailing stop order can move up when the bid price moves up. In both cases, if the bid price falls to or below the trigger price, your order may execute.

Trailing Stop Example

There are four flavors of the trailing stop order which we will discuss below in further detail:

  • Trailing Stop ($): triggers a market order.
  • Trailing Stop (%): triggers a market order.
  • Trailing Stop-Limit ($): triggers a limit order, Day or Good Until Canceled.
  • Trailing Stop-Limit (%): triggers a limit order, Day or Good Until Canceled.

Why would you want to use a trailing stop order?

A trailing stop order is typically used by investors as a strategy to minimize losses and protect gains. Keep in mind, a trailing stop order will not guarantee protection from losses in a volatile market.

Trail Amount

The trail amount is how closely you want your trigger price to “trail” the bid price. When the market moves, we check to see if your trigger price needs to be adjusted upward, and we use your trail amount to do the math. If the difference between the current bid price and the current trigger price ever exceeds your trail amount, we will shift your trigger price up to match your desired trail amount. Pretty neat, right?

Note: The trail amount must be between $0.01 and $30.00 or between 1% and 30%. The trail amount can never exceed 30% of the bid price when the order is entered.

Trigger Price

Your order will be triggered and sent to an exchange when the most recent bid price falls to or dips below your trigger price. The trigger price can only increase in price (it will never decrease).

  • Current Trigger Price ($) = (Highest bid price achieved) – ($ Trail Amount)
  • Current Trigger Price (%) = (Highest bid price achieved) – (Bid price * (100% - Trail Amount %))

Trailing Stop-Limit

A trailing stop-limit tells us to place a limit order (instead of a market order) if the bid price falls to your trigger price. It's like saying, "If the bid price falls to my trigger price, I want to sell, but I only want to sell if I can get this limit price or higher." That limit price can be your trigger price or less, depending on your limit offset.

Limit Offset

This field lets you tell us how much less than the trigger price you are willing to sell for. You can enter a value from $0.01 up to $1.00. The limit price cannot be higher than your trigger price.

  • Limit Price (if/when the order is activated) = Highest Trigger Price Achieved – Limit Offset Amount

Note: The limit offset can only be entered in dollar increments for both $ and % based trailing stop-limit orders.

A little confused? Have no fear, the examples below should help clear things up…

Examples:

These examples are hypothetical in nature and are not meant to predict any future results (our lawyers made us say this).

  1. Trailing Stop ($): You entered a $1.00 trail amount on a $10.00 security. Your initial trigger price will be $9.00 ($10.00- $1.00). If the price of the security goes up to $20.00, your new trigger price will be $19.00 ($20.00-$1.00).
  2. Trailing Stop (%): You entered a 10% trail amount on a $10.00 security. Your initial trigger price will be $9.00 (90% of $10.00 is $9.00 and we get 90% because 100% - 10% = 90%). If the price of the security goes up to $20.00, your trigger price will now be $18.00 (90% of $20.00).
  3. Trailing Stop Limit ($): You entered a $1.00 trail amount on a $15.00 security and included a Limit Offset of $0.25. Your initial trigger price will be $14.00 ($15.00 - $1.00) and the order will have a limit price of $13.75, if the order is triggered at $14.00.
  4. Trailing Stop Limit (%): You entered a 10% trail amount on a $30.00 security and included a Limit Offset of $0.50. Your initial trigger price will be $27.00 ($30.00 - 10%) and the order will have a limit price of $26.50 ($27.00 - $0.50), if the order is trigger at $27.00.

What's the difference between ($) and (%) based trailing stops?

As you can see, the initial trigger prices in examples 1 and 2 are identical (i.e. $9.00). In both cases the security goes up to $20.00 per share. The key difference is that the new trigger price for the trailing stop ($) order is $19.00, whereas the new trigger price for the trailing stop (%) order is $18.00. Hmm, why is this? Well, 10% of $10.00 per share is $1.00 but 10% of $20.00 per share is $2.00 (vs. $1.00), which is where the difference comes into play.

How can I check the status of my current trigger price?

You can find the current trigger price in the Order Details section. Navigate to Trade > Order Status and next to the appropriate order, click details. You will see "Current Trigger Price" listed.

Note: Your trigger price will be established only when the markets are open. If you place your order when the markets are closed, you must wait until the markets open to see the status of your current trigger price.

Which securities are eligible?

Trailing Stops can only be used for listed equity securities.

All or None Orders

All or None is an option that you can add to a limit order. If you place an order as All or None, the order will only execute if the entire quantity is available at your entered limit price. If shares are not available at the limit price, then the order will remain open until the order expires or is canceled.

You can specify an All or None condition on Limit and Stop Limit Orders.

For full transaction cost details, please see the ShareBuilder Pricing & Rates.