Special Orders and Trading Instructions
Special Orders
Special orders and trading instructions are sometimes used to facilitate transactions between active market participants. These "special" transactions are typically designed for one-time purchases or sales, or as an alternative to normal market and limit orders. Some special orders and trading instructions are used for automated trading where the order is triggered by another event, such as a stock's value reaching a certain price level. Others are programmed to activate automatically when end-of day (EOD) market activity indicates the value of an asset has reached a specific threshold.
Special orders, or market-on-open orders, are orders to buy or sell a stock when the market on that stock opens. Traders use special orders to manage their risk, especially during volatile periods in which markets may close before the intended time for a trade. In some cases, you need to know whether your buy order will be executed early—when it executes—or if your sell order will not be executed at all.
Stop order
A stop order is an order to buy or sell a stock once the price of the stock reaches a specified price. When the stop price is reached, a stop order becomes a market order. A buy stop order is entered at a stop price above the current market price. Investors generally use a buy stop order to limit a loss or to protect a profit on a stock that they have sold short. A sell stop order is entered at a stop price below the current market price.
Stop orders are an important tool for any investor. Stop orders help you to limit losses or capitalize on opportunities that you see in the stock market. They also protect your profits when you are long a stock which has pulled back from an extended period of high price climb. A stop order is an order to buy or sell a particular stock once it reaches a specified price, known as the stop price. When the stop price is reached, a stop order becomes a market order
Stop-limit order
Stop limit order is a special type of market order used by investors to control the price at which they want their stop loss or stop profit orders to be executed.
Day Orders, Good-Til-Cancelled Orders, and Immediate-Or-Cancel Orders
The GTC order, the IoC order, and Immediate-or-Cancel (IOC) orders represent timing instructions for an order. These orders usually arise out of market order conditions or from limit conditions. Unless an investor specifies a time frame for the expiration of his order, orders to buy or sell a stock are Day orders, meaning they are good only during that trading day. An IOC order is an order to buy or sell a stock that must be executed immediately. This type of order will not cancel itself as long as its portion can be executed immediately.
Day orders, Good-til-cancelled (GtC) orders, and immediate-or-cancel (IoC) orders are important tools for placing market or limit orders that have no time limit. Most brokerage firms have time limits for their GtC orders in order to ensure that if an investor does not act within the specified period then the order is cancelled.
Fill-Or-Kill and All-Or-None Orders
The two most commonly used order types in stock trading areFill-Or-Kill (FOK) and All-Or-None orders. An FOKorder is an order to buy or sell a stock that must be executed immediately in its entirety; otherwise, the entire order will be cancelled (i.e., no partial execution of the order is allowed) . AONorder is an order to buy or sell a stock that must be executed in its entirety, or not executed at all. However, unlike the FOK orders, AON orders that cannot be executed immediately remain active until they are executed or cancelled .
FOK orders are also known as “fill or kill” orders. These orders are used for stock purchases or sales and require immediate execution. The order may be either over-the-counter (OTC) or intra-day , and thus need not be specified in detail, but the quote according to which it is going to be executed must be known at the time of placing the order. In this instance, orders can be either written on a given date at certain price point within a specified time period
Opening Transactions
Investors should be aware that any order placed outside of regular trading hours and designated for trading only during regular hours (market open) will usually be eligible to execute at an opening price.
Related Information
The Securities and Exchange Commission's (SEC) Office of Investor Education and Advocacy (OIEA) uses Education Week to provide information about the types of orders investors may use to buy or sell stock, including the seven openings that are available during normal market hours.
