Limit order is a basic trading order containing a maximum purchase or a minimum sale price at which the order can be executed. If the limit price does not meet the market conditions at the time of the order placement, the order will be inserted in the market depth and wait until the conditions for its execution are met.
Example: You want to buy shares of ABCD. The current best bid/ask on the market is 100/102. If you want to immediately execute your order, the limit price of your "buy" limit order will be set to 102. If you want to buy shares of ABCD at 96, your limit price will be 96. The order will be put in the market depth and will wait for the given price level.
Stop market order is designed for limiting losses and protecting won gains. The investor only sets a stop price (not a limit price) that activates the order once the price is reached. The condition for activation of the order is the execution of a trade (without regard to amount) at a price equal to the stop price (or lower in case of a "sell" stop order). The "sell" order is then sent out without a limit price, i.e. with a price priority - "at the best price" - and is executed at the current market price. In case of low liquidity, the selling price can by significantly lower than the stop price which activated the order.
Example: An investor bought ABCD at 100 a share. Immediately after the purchase, a "sell" stop order was placed with the maximum loss limit of 10%. Parameters are as follows: stop price 90, validity - one month. If a trade was executed at 90, the stop order would be activated, automatically sent to a stock exchange and executed at the current market price.
Stop limit order is designed for limiting losses and protecting won gains. The Investor sets a stop price and a limit price. The stop-limit order is activated once a trade is executed for a stop price, or at a price lower in a "sell" stop-limit order, or at a price higher in a "buy" stop-limit order. The final price at which the order is executed thus cannot be worse that the limit price designated by the client. The order allows the automatically react on market price development and quickly activate the limit price. If you want to hedge against a loss stemming from a sharp fall, set a stop price, which activates the order when hit, and, at the same time, a limit price. One basic rule: the stop price must always be set higher than the limit price (in a "buy" stop-limit order).
Example: An investor bought ABCD shares at 100. Immediately after the purchase, a "sell" stop limit order was placed with the maximum accepted loss of 10%. Parameters are as follows: stop price 92, limit price 90. If the market price plummets to 92, the order will be activated at 90. If at the moment of accepting the Limit order, the price is lower than 90, then the order will be active until the expiration date of the Stop limit order as a standard Limit order with the limit price at 90.
Bracket order allows you to set and exact level of profit and a maximum amount of loss. It consists of a limit order and a stop-limit order. Both orders must be in the same direction, i.e. to buy or sell. The order is executed either by a limit order at a given profit or by a stop-limit order at a given loss. After placing a bracket order, its limit part is activated; in case the conditions for activating stop limit part are met before that, the limit part of the order is rescinded and the stop-limit part is activated instead. A minimum price differential for the two parts is not set but it should reflect market conditions and investor´s intentions.
Example: An investor bought shares of ABCD at 100 apiece. The gain/loss level was set at 10% and a bracket order was placed, featuring the following parameters : "Sell" limit order with a limit price of 110 and a "sell" stop limit order with a stop price at 92 and a limit price at 90. If the price goes higher, the shares will be sold at 110; if the price falls to 92, the "sell" limit order with the limit price at 90 will be activated (and the order to sell at 110 will be cancelled).
Trailing stop order represents improved protection against a loss and can also lock gains in a better way. When placing the order, the Stop price and the Limit price has to be defined. Stop price is designed for activating the order and the Limit price for limiting the execution price. Stop and Limit price is defined as an absolute difference between the highest ask price and the lowest bid price (depending on the direction of the order). A "sell" trailing stop order sets the stop price at a fixed amount below the market price with an attached "trailing" amount. As the market price rises, the stop price rises by the trailing amount, but if the stock price falls, the stop loss price doesn't change, and a market order is submitted when the stop price is hit. This technique is designed to allow investors to specify a limit on the maximum possible loss, without setting a limit on the maximum possible gain. "Buy" trailing stop orders are the mirror image of "sell" trailing stop orders, and are most appropriate in falling markets. When keeping track with the price developments on the market, the readings are taken every half a second, which should suit the interest of the client. Thus, changes in the price parameters of an order are less dependent on algorythmic or high-speed orders of other parties.
Example: After buying shares of ABCD at 710, you can place a "sell" trailing stop order with the following characteristics: The current position of the best bid/ask price is 720/721.5; the investor bets ABCD will rise and wants to make use of it. The aim of the order is to prevent losses from price movements other than anticipated and to score a gain within the preset range if possible. The parameters are as follows: The best bid price is 720. The absolute gap for setting the initial stop price is 5, and 7 for the limit price. The order will have the following conditions when placed: stop price 715, limit price 713. If the best bid price after sending the order only gets lower, then an executed trade at 715 or a lower price will activate a "sell" limit order with a minimal selling price of 713.
If, after sending the order, the best bid price climbs to 723.5 for instance, the stop price and limit price will move up to 718.5 a 716.5 and "trail" the market price. This keeps on with each additional increase in the best bid price, unless a trade is executed after such a move at 5 units lower than the best bid price.
If order allows you to combine orders which logically follow one by one and are executed after the condition of the previous order is met. For example, a "buy" limit order, when executed, can act as a condition for activating a bracket order ("sell" limit and "sell" stop limit). Combinations of orders can be used both in cases of rising prices and long positions, as well as in cases of betting on falling prices. IF order can be placed only through a broker.
Example: An investor places a "sell" limit order for ABCD shares at 820. If the order is executed, a "buy" order for EFGH shares at 270 will be placed on the market. Both orders are placed within one environment as an IF order.
Type of orders