This week’s video walks through the definitions and use cases for order types. You’ll learn about stock trading with market, limit, stop, and stop limit orders.

Notes

Order Entry

Buy Orders

Buy Market: Buy at the next available price. I will get filled. I don’t know what price.

Buy Limit: Buy at this price or better. Use this if I want to buy know, but I want to ensure I get filled at the current price or use if you’re waiting for the stock to go DOWN to a certain price before you buy.

Buy Stop (Market): The stop is the trigger. That’s the price that needs reached before anything happens. What happens is a buy market order is sent. Buy if the stock goes UP to the stop price.

                Pro: You will get filled if the stock rises to the stop price.

                Con: There is no cap. If the stock gaps up, you may get filled at a much higher price than you anticipated.

Stock is at $54. Buy stop @ $55. Stock gaps up and opens at $58.

Buy Stop Limit: The stop is the trigger. That’s the price that needs reached before anything happens. What happens is a buy limit order is sent. Buy if the stock goes UP to the stop price. But it routes a limit order. And that ensures you don’t get filled if it jumps above t he limit price.

Stock is at $54. Buy stop @ $55, limit $55.50.

Sell Orders

Sell Market Order: Sell at the next available price. I will get filled. I don’t know what price.

Sell Limit Order: Sell at this price or higher. Use this if I want to sell now, but I want to ensure I get filled at the current price, or use if you’re waiting for the stock to go UP to a certain price before you sell. Profit Target

Sell Stop (Market) Order: The stop is the trigger. That’s the price that needs reached before anything happens. What happens is a sell market order is sent. Sell if the stock goes DOWN to the stop price. Stop Loss

                Pro: You will get filled if the stock falls to the stop price.

                Con: There is no cap. If the stock gaps down, you may get filled at a much lower price than you anticipated.

Sell Stop Limit Order: The stop is the trigger. That’s the price that needs reached before anything happens. What happens is a sell limit order is sent. Sell if the stock goes DOWN to the stop price, but no lower than the LIMIT price.

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