Types of Stock Orders

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There are different types of stock orders, including market orders, which invest in a stock that is trading at a certain price, and limit orders, which control the investors budget and investments. Get tips on how to place stock orders for different functions with advice from an investment portfolio manager in this free video on investing and personal finance.

Part of the Video Series: Investing & Retirement Funds
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Video Transcript

So types of stock orders, what are the different types of orders you can do? The most common is a market order. A market order means that you have looked at the price of a stock and the stock is trading within a range that you are comfortable with and you just put an order out there and you buy 100 shares and it hits at whatever the market is at that given second that it hits the floor. Now you can also do limit orders and limit orders will give you the option of specifying the price so you want the stock to say come down. If it is trading at $40 and you want to buy it at $39 you put your limit order in for $39 and that stock is not going to hit. You are not going to make that purchase until the stock comes down to $39. Now with all limit orders there is also the threat that the transaction won't take place. If it just sits at $40 and doesn't come down to $30 and continues up on its way you have missed it and the transaction won't happen, that an be a good or a bad thing and again market orders you don't have to worry about those limitations so your transaction will most definitely take place but we don't know at what price exactly. Limit orders are more for controlling a budget and really specifying where you want to be. Now there's also stop limit orders which are also common and stop limit orders place a stop where the stock will hit a certain price which then activates a limit order and then the stock can trade once it hits that limit order but the stop is put in there as a safe guard to make sure that the thresh hold is met. Now there are many many other orders. There are orders that require the entire order to be filled at one time or the order is not placed. As is common with many market orders for say 300 shares you may actually get that order split up over a few trades where you get 50 shares and then 100 and then another 50 and so forth so you can place an order to say I want all of my shares traded at one time in one lump sum so I get the one price on all of those shares. And again there are many many many different types but the two most common you are going to run into are market orders which guarantee almost always a trade but not the price and then a limit order which won't guarantee that the trade takes place but it will make sure that you get at least the price that you are looking for.

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