The purpose of the order is that it must be fully identified, it must contain:
- Identify an order whether it is a buy or a sell order.
- The titles to execute this order
- Volume of shares that one is willing to negotiate.
- Price at what you want to buy or sell.
- Order execution method.
- Expiration date.
We will also take into account how to negotiate orders should have an order of priority:
- First of all, they will be ordered by price: in the case of a purchase order it is ordered from highest to lowest, in the case of dealing with a sales order it will be ordered from lowest to highest.
- If they match the price, they will be ordered according to the order of introduction, that is, the one that has been issued in the first place.
Types of stock exchange orders
The most frequent types of stock exchange orders that determine the price and the mode of transaction with which it is customary to trade in the stock exchange session:
- Order to open: it occurs in the stock markets for its execution when the market opens.
- Market order: executed at the current market price.
- Limited Order: limited to the price indicated by the investor. In purchase order it will not be higher than the price and otherwise it will not be lower in sales.
- Order at the best: takes the best price offered by the market at the time of its issue. In case the best price does not have enough titles, this order will be carried out partially, the rest being limited to that price.
- On Stop Order : this type of order is not issued until the quotation does not reach the price that has been determined. When it reaches the price, it then becomes a market order.
- Stop-Limited Order: this type of order is not issued until the quote does not reach a certain price, when it arrives it becomes a limited order.
- The Dynamic Stop: it has the advantage that the Stop price moves parallel to the quote price if the movement is favorable and remains quiet if it is unfavorable.
Most advanced stock exchange types
There are different modalities in which an order can be issued during the stock exchange session. Below, we explain three advanced orders that we consider important:
Order GTC (Good Till Canceled)
GTC (Good Till Canceled) in Portuguese: good order until canceled. It is a type of order to buy or sell a value at a specific price that remains active in the market until the order is canceled. Orders sent to a broker are GTC type by default. A GTC order will not be executed until it reaches the price of its value. Investors use GTC to insert a limit price far from the market price. The broker cannot cancel this type of order, in the vast majority of cases GTC orders are canceled by a broker within 30-90 days.
Order GFD (Good For the day)
GFD (Good for the day) . Such an order will remain active until the end of the current day, so it will automatically expire if not executed on the day it took place. The GFD order will only remain active for the day the order was inserted, in the event that it was not canceled previously or the price limit was not met during the trading session. For example, like the 24-hour Forex Market, this generally means that at 5pm EST, when the market in the United States closes, this type of GFD orders will be canceled. However, this can vary from broker to broker.
Order cancels other (OCO)
OCO (Order cancels other). Such an order is a mixture of two limit and stop loss orders. If one executes the other, it will be canceled automatically. When the OCO order reaches its top or level limit it is executed, then the other order is automatically canceled. Many experienced investors use the OCO order type to mitigate risk.
An example if the price of EUR / USD were at 1.2040. You already want to buy at 1.2095 or buy at 1.1985. In this case, if the order executed was the purchase at 1.2095, the order to sell at 1.1985 will be automatically canceled.
Conditions for executing orders
In the execution of stock exchange orders, several types of conditions can be established, such as:
- Minimum volume: the order must establish a minimum quantity to trade. The rest is negotiated without limit in volume.
- Execute or cancel: the order is executed by the quantity of titles available at the moment of entering in the market and refuses the rest.
- All or nothing : they are executed immediately for the totality of the titles, otherwise they are not executed.
- With hidden volume : those orders that show only a part of the volume to be traded (must have a minimum of 250 titles), when the visible part is executed of the total volume, another number of titles will appear. It is recommended for large orders.