Stock Trading Orders: Market, Limit, Day, GTC Orders

What are the different types of stock trading orders?

There are several types of trades that meet one’s stock trading requirements and objectives — market order, limit order, all-or-none order, day order, amd good till canceled order.

• 1. Market Order

The simplest and most common type, a Market Order is an order to buy or sell immediately at the best available price.

By the time the order is actually executed, the market price may be higher or lower. For example, you called your broker to purchase 1,000 shares of Philex Mining Corporation (Stock Code: PX). At that time of the call, PX may be trading at P11.00, but when the market order is actually executed, the price of PX could have been P11.25 or P10.75.

• 2. Limit Order

A Limit Order sets the maximum or minimum price at which you are willing to buy or sell a stock.

Assume that the stock price of Bank of the Philippine Islands (Stock Code: BPI) is P55.00. You do not want to pay more than P53.00 per share so you place a limit order to execute at P52.50.

If BPI’s price falls to P52.50, your order will be executed. The risk here is that if the price continues to decline, you will suffer losses if your limit order was executed at a higher price. For example, if your limit order for BPI shares were executed at P52.50 but the stock further declined to P50.00, you are already sitting with a P2.50-per-share paper loss.

• 3. All-or-None Order

If you want to minimize transaction fees or ensure that all stocks are bought at a single price, you may want to place an All-or-None Order.

This type of order basically allows you to get either the entire quantity of stock you requested or none at all. It instructs your broker not to execute the trade unless it can be done in a single transaction.

• 4. Day Order

If a Day Order is not executed within the day, the order expires after the end of that trading day.

• 5. Good Till Canceled (GTC) Order

If the trade is not executed within the day, a Good Till Canceled (GTC) order remains open in succeeding trading days until it is executed or canceled.

In the Philippines, GTC orders automatically expire after they fail to be executed within seven trading days. In the United States, GTC orders remain open until 60 calendar days have passed.

Other references:

• Stock Trading 101: Guide and Tutorial to Stocks
• Other stock trading articles in PMT
• Discussion Forum on Stock Trading
• Stock Discussion of all PSE Listed Firms

Note: This is the fourth of several parts of Pinoy Money Talk’s primer on how to earn from trading and investing in the stock market, particularly the Philippine stock market.

Article source: Philippine Stock Exchange.

Topic keywords for this post:

• order types philippine market
• philippine broker with limit orders