Order Type

Market Orders

A market order is an order to buy or sell a stock at the current market price. Unless you specify otherwise, we will enter your order as a market order. The advantage of a market order is that as long as there are willing buyers and sellers, you are almost always guaranteed your order will be executed. The disadvantage is the price you pay when your order is executed may not be the price you expected.

Limit Orders

A limit order is an order to buy or sell a security at a specific price. A buy limit order can only be executed at the limit price or lower, and a sell limit order can only be executed at the limit price or higher.

Stop Orders

A stop order, also referred to as a stop-loss order, is an order to buy or sell a stock once the price of the stock reaches a specified price, known as the stop price. When the stop price is reached, a stop order becomes a market order. A buy stop order is entered at a stop price above the current market price. Investors generally use a buy stop order in an attempt to limit a loss or to protect a profit on a stock that they have sold short. A sell stop order is entered at a stop price below the current market price. Investors generally use a sell stop order in an attempt to limit a loss or to protect a profit on a stock that they own.

Before using a stop order, investors should consider the following:

The stop price is not the guaranteed execution price for a stop order. The stop price is a trigger that causes the stop order to become a market order. The execution price an investor receives for this market order can deviate significantly from the stop price in a fast-moving market where prices change rapidly. An investor can avoid the risk of a stop order executing at an unexpected price by placing a stop-limit order. A stop-limit order includes a limit price that requires the order to be executed at the limit price or better – but the limit price may prevent the order from being executed.

A stop order may be triggered by a short-term, intraday price move that results in an execution price for the stop order that is substantially worse than the stock’s closing price for the day. Investors should carefully consider the risk of such short-term price fluctuations in deciding whether to use a stop order and in selecting the stop price for an order.

Stop-Limit Orders

A stop-limit order is an order to buy or sell a stock that combines the features of a stop order and a limit order. Once the stop price is reached, a stop-limit order becomes a limit order that will be executed at a specified price (or better). The benefit of a stop-limit order is that the investor can control the price at which the order will be executed.

Before using a stop-limit order, investors should consider the following:

As with all limit orders, a stop-limit order may not be executed if the stock’s price moves away from the specified limit price, which may occur in a fast-moving market.

The stop price and the limit price for a stop-limit order do not have to be the same price. For example, a sell stop limit order with a stop price of $3.00 may have a limit price of $2.50. Such an order would become an active limit order if market prices reach $3.00, however the order can only be executed at a price of $2.50 or better.

As with a stop order, a stop-limit order may be triggered by a short-term, intraday price move that results in an execution price for the stop order that is substantially inferior to the stock’s closing price for the day. Investors should carefully consider the risk of such short-term price fluctuations in deciding whether to use a stop order and in selecting the stop price for an order.

Market On Close Orders

A market-on-close order is simply a market order that is scheduled to trade at the close, at the most recent trading price. The MOC order remains dormant until near the close, at which time it becomes active. Once the MOC order becomes active, it behaves like a normal market order. MOC orders can help investors to get into or out of the market at the closing price without having to place a market order immediately when the market closes.