How to Write Stock Trade Orders
Before the advent of electronic trading, traders and investors had to write all trade orders. To this day, traders refer to publishing or submitting a trade request as "writing an order." There are three main type of orders: market, limit, and stop. All three have a purpose and can be helpful tools. The type of order you write will depend on the goal of your order. Ultimately, you will have to choose between price and execution.
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Instructions
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Write a market order if execution is more important than price. A market order is an order to buy or sell at the current market price. This is generally the default order placed. The advantage of a market order is that you are guaranteed your order will be executed, however, you have no control over the price the dealer executes the order at.
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Write a limit order. A limit order should be written if you want to control the price at which the stock is purchased. There is no guarantee that your order will be executed at that price. You will need to know the price at which you would like to buy/sell the stock.
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Write a stop order. A stop order is an order to buy or sell at the market price once a stock price has reached a certain level set by you. Stop orders can be either buy stop orders or limit stop orders. This is a common order for penny stocks and stocks which trade over the counter.
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