What Is a Closing Order in the Stock Market?
A closing order is just one of the many different order types investors and traders can use to buy and sell shares of stock. As the name implies, it is used at or around a stock's daily closing price.
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Definition
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A buyer or seller of stock can tell his broker that he wants to initiate at an order at, or close to, the closing price of a stock for a particular day. However, since the investor is picking a set price, there is no guarantee that the order will be filled.
Types
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There are over 40 types of orders, though only four are used as close orders: market orders, market on close, limit orders, and buy or sell stops.
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Broker Action
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Brokers cannot fill a limit order if that price is not quoted by the exchange, but brokers must execute market orders.
Market Hours
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Exchanges in the United States close at 4 p.m. Eastern time, and if an order is not executed by that time or soon afterward, most retail investors have to wait until the next trading day to have their orders filled.
Strategy
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Close orders are used as a strategic way of attempting to play the next day's trading action.
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Comments
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very good post, I was really searching for this topic as I wanted this topic to understand completely and it is also very rare in internet that is why it was very difficult to understand. thank you for sharing this. Regard Stock Market.
