Can someone give me information about different order types for trading please?

Question

Hey,

I was just wondering if anyone knows about all of these order types for executing a trade

- At Best

- Limit Order

- Basic Stop

- Trailing Stop

Any information would be very helpful. Please try not to give any additional links unless they are completely relevant.

Thanks for reading, im looking forward to your answers.

Answer 1

At Best = Buying or selling at the prevailing bid or ask at the time the order is placed. Also called a "market order."

Limit Order = Buying or selling a stock once it reaches a predetermined price or better.

Basic Stop = A tool mostly used to lock in profits or limit losses, especially useful for those who may not be able to be on top of the markets full time. For example, someone buys a stock at $50 per share and wants to limit a potential loss to 10% ... He would set a sell stop order at $45 per share. If the shares should drop and reach $45, the order would be triggered and the stock sold at the next tick price. Same principle in reverse for a buy stop.

Trailing Stop = Similar to a basic stop, except that the stop limit will move (trail) along with the stock price. Using the example above, the stock is bought at $50, and the sell stop is set at $45 (limiting loss to 10%). If the stock price moves higher, the stop limit price moves higher, as well. So, if the stock rises to $52, the stop limit would rise to $46.80. If the stock continues to rise, the stop limit will keep rising in tandem. If the stock falls from the original $50 purchase, the stop limit will not change.

I hope this helps.