Blog Guide for New Investors Types of Stock Orders

The Different Types of Stock Orders for Trading Stocks: A Guide for New Investors

First-time investors will be able to make effective stock investment decisions if they know all their options when it comes to purchasing and selling stocks. This article will discuss the various types of stock orders that are available for anyone who is aspiring to make it big in the stock market:

Market order

The most common stock order type, a market order involves requesting to purchase or sell a stock at the current rate in the stock market.

Pro tip: Ignore the last-trade price. If you’re selling stocks, look at the bid price. And if you’re buying stocks, look at the ask price.

Stop-market order

It’s a request to purchase or sell a stock at a price you specify, which means the broker will have to execute the trade when the stock goes above or below a threshold you set. The goal here is to reduce your losses.

Pro tip: Be careful when making a stop-market order because a quick but temporary decrease in the stock price isn’t a good scenario.

Stop-limit order

This type of order is very much the same as a stop-market order. What sets them apart is that in a stop-limit order, the request is transformed into a limit order and not a market order.

Limit order

This type of stock order is essentially similar to a stop-market order, except for the purpose of using it. You make a limit order to maximize your profits. This makes it ideal for stock investors who cannot track their investment portfolios all the time.

Pro tip: Do keep in mind that limit orders are done on a first-come, first-served basis. So, for example, you specify a limit order at $50. You’ll need to wait until the other orders at that price are executed.

There are many other types of stock orders, but these are the basic ones that beginners have to understand in order to make the most out of their investments in the stock market.