Types Of Orders On NY Stock Exchange

What is market order? What is a limit order? What is a stop order? What is a stop market order? What is a stop limit order? What is a trailing stop order? This article explains how different types of orders work on NYSE.

Orders are accepted subject to the rules and policies of the various exchanges and execution points. Marketplace rules also differ for normal and Extended-Hours Trading sessions.

Order Types

Select the order type from the following choices:

Market Order – Choosing “Market” for the order type indicates that you wish to seek an immediate execution for your order at the next available market price.

Limit – Choosing “Limit” for the order type indicates that you wish to seek the purchase or sale of a stock at a specific price or better. Please remember that stocks and options can trade on multiple exchanges, but an order can only be placed with one exchange, market maker or electronic communications network (ECN). Therefore, your order is entitled to be filled in the marketplace with which it was placed. Be careful not to assume your order has been executed simply because the stock or options trades at the price specified in your limit order. If the security trades through your price, contact a TD AMERITRADE representative for a possible confirmation.

Stop – When placing a Stop order to buy, enter a stop price above the ask price. When placing a Stop order to sell, enter a price below the current bid price. Sell-Stop orders for NYSE, NASDAQ and OTCBB securities are activated by the bid price, and Buy-Stop orders by the ask price. An options Sell-Stop is activated by the print (trade) price or ask/offer price. An options Buy-Stop is activated by the bid price, or a print (trade). Stop orders are accepted on listed stocks, NASDAQ (NMS) stocks and most options.

With Stop orders, there is no guarantee that the execution price of your order will be at or near the activation price. Execution at a price different than the activation price is more likely to occur in conditions such as a fast-moving market, at market open or market close, or when trading has been halted on a security.

Stop market – Choosing “Stop market” for the order type indicates that you want your Stop order to become a market order once a specific price has been reached. There is no guarantee that the execution price will be equal to or near the activation price. Stop orders are accepted on listed stocks, NASDAQ (NMS) stocks and most options.

Stop limit – Choosing “Stop limit” for the order type indicates that you want this order to seek an execution at a specific limit price or better once the activation price is reached. Enter an activation price as well as a limit price for these orders. Depending on your strategy, the limit price and activation price may be the same. The order becomes a limit order once the activation price has been reached.

Stop limit orders are accepted on listed stocks, NASDAQ (NMS) stocks and most options.

Trailing Stop – Trailing Stops are orders entered with a stop parameter that creates a moving or “trailing” activation price. Sell Trailing Stop orders may help you control risk on open positions by allowing you to enter a stop order with an activation price that changes with the market. The Stop order works with a ratchet effect, trailing price movements, in a positive direction only. For Sell Trailing Stops, the activation price only moves upward. For Buy Trailing Stops, the activation price only moves downward. If the price reverses direction, the Stop remains at its previous level and will be activated if the price reverses by more than the number of points or percent specified.