There is a series of free trading lessons, which consists of 10 topics that traders, both beginners and experienced traders, should find them very useful.

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(1) The importance of psychology in price movement.
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(3) Understanding of technical price objectives.
(4) How to picture price objectives.
(5) How to trade with moving averages.
(6) How to use point and figure trading techniques.
(7) How to use the RSI indicator.
(8) How to correctly use stochastics in your trading.
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(10) How to capitalize on natural market cycles.

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Sunday, November 2, 2008

Types of Orders in Trading

Before getting started to trade, a trader needs to get familiar with types and specification of orders in order to prevent from making unnecessary mistakes.

Below is a list of a number of types of orders. I’m trying to organize them for easier understanding. We’ll discuss each of them further in the next posts.

Too many types of orders may cause some confusion and lose of focus. Therefore, I also mark a few of very common types of orders in the list below with “***”.
(Click the LINK in BLUE FONTS below to read the posts on each type of orders).

For beginners, you can start to get familiar with these marked types of orders first, before moving on to more advanced types of orders. Hope this can help you to speed up your learning. :-)

Types of Orders related to How an Order will Get FILLED:

1) Market Order ***
2) Limit Order ***

3) Market-On-Close (MOC) Order
4) Limit-On-Close (LOC) Order

5) Market-On-Open (MOO) Order
6) Limit-On-Open (LOO) Order

7) Market-To-Limit (MTL) Order
8) Iceberg Order

Types of Orders related to the TIMING / DURATION of the Order:
When submitting an order, a trader also needs to specify the timing or duration in which the order will still be active / valid before it gets executed.

1) Day Order ***
2) Good Till Cancelled (GTC) ***
3) Good Till Date/Time (GTD)

Contingency Order is an order that is to be executed only if one or more specified conditions are met.
Possible conditions may include quantity, price (of that security or another security), or the completion of another order.

Even though some brokers accept contingency orders, they are actually not obligated to do so. However, if they do accept such orders, they must abide by the terms of the order.

Examples of contingency orders are listed below.

Contingency Orders with Conditions related to QUANTITY / SIZE of Order and TIMING of Execution:
When submitting Market or Limit Orders, it is also possible to attach conditions that are related to the ability of the broker to fulfill the quantity / size of the orders and timing of execution.
Contingency orders with such conditions are as follow:

1) Fill-Or-Kill (FOK)
2) Immediate-Or-Cancel (IOC)
3) All-Or-None (AON)

Contingency Orders with Conditions related to PRICE
Contingency orders with conditions related to price are very useful, particularly when you cannot monitor the market all the time. These orders allow traders to open or close position in the market automatically once certain conditions are met.
Examples of Contingency orders with conditions related to Price are as follow:

For Automatic OPENING of a Position:
The following are some types of orders that allow you to open a position in the market automatically once a certain condition is met, particularly when you cannot monitor the market all the time:

1) Market-If-Touched (MIT) Order
2) Limit-If-Touched (LIT) Order

For Automatic CLOSING of a Position:
The following are some types of orders that allow you to close the position automatically once certain condition/s is/are met, in order to protect your position, particularly when you cannot monitor the market all the time:

1) Stop Order ***
2) Stop Limit Order
3) Trailing Stop Order ***
4) Trailing Stop Limit Order

More COMPLEX Types of Contingency Orders
1) Conditional / Contingent Order
2) Bracketed Order
3) One-Cancels-Other (OCO) & One-Cancels-All (OCA) Orders
4) One-Triggers-Other (OTO) & One-Triggers-All (OTA) Orders

Related Topics:
* Free Trading Educational Video: Learn Technical Tips from Dan Gramza
* Options Trading Basic – Part 1
* Options Trading Basic – Part 2
* Understanding Implied Volatility (IV)
* Option Greek
* Understanding Option’s Time Value
* Learning Candlestick Charts
* Learning Charts Patterns
* Getting Started Trading

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