Order - Stock Trader Glossary

An order is a trader's request to buy or sell a certain amount of stock at a specific price. It is the most basic building block of trading in the stock market. It's important to understand the different types of orders available and how they work before placing trades to ensure that you're making informed decisions that align with your investment goals and risk tolerance.

A market order is the simplest type of order and executes at the current market price. This means that the trader is willing to buy or sell the stock at whatever price it is currently trading for. This type of order is typically executed immediately, but the exact price of the trade may not be guaranteed.

A limit order is used to specify the maximum price at which a buyer is willing to buy a stock or the minimum price at which a seller is willing to sell a stock. The order will only execute if the stock price reaches the specified limit price. This type of order provides more control over the execution price but may not be filled if the stock price does not reach the specified limit.

A stop-loss order is used to limit potential losses by automatically selling a stock if it falls below a certain price point. The stop-loss order is typically set at a price level below the current market price, and if the stock price falls to that level, the order will be executed at the best available price. This type of order helps traders to limit their losses in case the stock price moves against them.

Other types of orders include stop-limit orders, trailing stop orders, and fill or kill orders, each with its own unique characteristics and uses. It's essential to understand how each order type works and when to use them to maximize your profits and minimize your risks.