Order Types Explained

Order types can be a little tricky to understand at first, but hopefully the explanations below will help keep you on the right track.

Market

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

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

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

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

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.

All or None

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.