DIFFERENT TYPES OF ORDERS

ORDER:

An instruction, especially to a broker, to buy, sell, or conduct some other transaction involving Equity, FX, Commodity, etc,..

(A)              Time Conditions

Day Order: This order remains valid during the trading day at the end of which it is cancelled.

IOC: An Immediate or Cancel (IOC) order allows the user to buy or sell a security as soon as the order is released into the system. IOC order results into a trade if matched immediately with the counter order else it is cancelled. Partial match is possible for the order, and the unmatched portion of the order is cancelled. For example, if a buy order for 1000 Microsoft is received by the system and the sell orders for Microsoft is only for

500 shares in the system, the 500 shares will be bought and the balance buy order for 500 shares will be cancelled immediately.

Good-till-date: These orders stay open till a defined date after which they are cancelled if not executed.

Good-till-cancelled: These orders stay open till the client cancels it. Normally, the broker rechecks for validity of these orders with the client at periodic intervals.

(B)              Quantity Conditions

DQ: An order with a Disclosed Quantity (DQ) allows the user to disclose only a portion of the order quantity to the market. For example, if the order quantity is 10,000 and the disclosed quantity is 2,000, then only 2,000 is released to the market. After this quantity is fully matched, a subsequent quantity of 2,000 is disclosed. Thus, totally five disclosures with the same order number are shown one after the other in the market.

Fill-or-Kill: Here the order must be executed immediately and fully; else it has to be cancelled. Here partial execution of orders as in the case of IOC is not allowed.

All-or-none: Given some time constraints such as day, the entire order has to be executed or the client is not obliged to accept a partial execution.

(C)              Price Conditions

Market: Market orders are orders for executing the trade at the going market price. The buy order is matched with the quotes available on the offer side and vice versa as soon as the order is received. Here there is no restriction on the price at which the trade should be executed.

Limit: This order type places a limit on the price at which the trade can be executed. In case of a ‘buy’, the limit specifies the maximum price that the client is willing to pay to buy the security and in case of ‘sell’, it is the lowest price that he is willing to accept.

Stop-Loss: This facility allows the user to release an order into the system, after the market price of the security reaches or crosses a threshold price called trigger price. For example, if for stop loss buy order, the trigger is $93.00, the limit price is $95.00 and the market (last traded) price is $90.00, then this order is released into the system once the  market price reaches or exceeds $93.00. This order is added to the regular lot book with time of triggering as the time stamp, as a limit order of $95.00. All stop loss orders are kept in a separate book (stop loss book) in the system until they are triggered.

Trigger Price: Price at which an order gets triggered from the stop loss book.

Limit Price: Price of the orders after triggering from stop loss book.

Other Conditional Orders

One cancels the other(OCO) - If one part(Buy/Sell) of the order is executed, then the other part is automatically canceled.

Entry Orders- If one part of the order is executed, the other part is to be placed into the system.

Entry loop- Looping of Entry orders indefinitely until user cancelled

Several combinations of the above orders are allowed providing flexibility to the buyer and sellers in the market.

Still orders can classified into many other types based upon the usage, Above classification is only the basic (main) classification.