Buy Market
An order to buy equity shares at the current available market price. This order
will be filled at the current market price, provided there is enough trading
volume to process a given trade.
Buy Limit
An order to buy equity shares at a specified price, or better. Buy-limit orders
can be used to specify the maximum price that an investor is willing to pay for
equity shares, and will be executed only once that price (or a better one) is
available.
Buy Stop
An order to buy equity shares once a specified price level is breached. This
type of order can be used by momentum traders who wish to buy shares in a
company only once the stock price has moved upwards past a threshold level
(such as a 200 day moving average), indicating upward momentum that is expected
to continue.
Sell Market
An order to sell equity shares at the current available market price. This
order will be filled at the current market price, provided there is enough
trading volume to process a trade.
Sell Limit
An order to sell equity shares at a specified price, or better. Sell-limit
orders can be used to specify a minimum price for which you are willing to sell
equity shares, and will be executed only once that price (or a better one) is
available. They can be useful if you have a target selling price in mind but
are unable to frequently monitor your portfolio.
Sell Stop
Also known as a "stop-loss order", a sell stop is an order to sell equity
shares once a specified price level has been breached. With this type of order,
you specify a "stop price", which will trigger an automatic sale of your shares
once a stock's price falls to the stop price or lower. This can be useful as a
safety net, limiting your potential losses to the difference between the
purchase price and stop price.
Sell-Short Market
An order to short sell equity shares at the current available market price. In
a short sale, you essentially borrow shares from your broker and sell them on
the market, in the hope that the share price will decrease. If it does, you can
buy the shares back in the open market and return them to your broker,
pocketing the difference between the (higher) sale price and the (lower)
purchase price. This order will be filled at the current market price, provided
there is enough trading volume to process your trade.
Sell-Short Limit
An order to short sell equity shares at a specified price, or better.
Sell-short limit orders can be used to specify a minimum price for which you
are willing to short sell equity shares, and will be executed only once that
price (or a better one) is available.
Sell-Short Stop
An order to short sell equity shares once a specified price level is breached.
This type of order can be used by momentum traders who wish to short sell
shares in a company only once the stock price has moved downwards past a
threshold level (such as a 200 day moving average), indicating a downward
momentum that is expected to continue.
Buy-to-Cover Market
An order to cover a short position in your portfolio by repurchasing shares at
the current market price. To complete a profitable short sale, you need to
first short sell a stock, and then (with any luck) repurchase the shares on the
open market at a lower price. When you repurchase the shares, this is called
"covering" your short sell and, therefore, the trade is called "buy to cover".
Buy-to-Cover Limit
An order to cover a short position in your portfolio by repurchasing shares,
but only once a specified price, or better, has been reached. This order can be
entered to set up an automatic cover of your short position once a stock's
price has fallen to your target covering price. A buy-to-cover limit is useful
if you have a target price in mind but are unable to frequently monitor your
portfolio.
Buy-to-Cover Stop
Similar to a sell-stop order, this order type will exit your position
automatically once a specified loss level is reached. In a buy-to-cover stop
order, you specify a maximum price that, when reached, triggers a covering
purchase of your shorted shares. Remember: in a short sale trade, the higher
the price moves after your short sale, the greater your losses.
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