How To Guide For: Understanding What An Order Type Is When Buying Stock & How To Apply Each Type

I wanted to go over order types when buying stocks for all the ladies out there who are considering investing in the stock market for the first time. When placing a stock trade you can set conditions on how the order is executed, as well as price restrictions and time limitation on the execution of the order. There are several order types that you can place when making a stock trade. Lets start with a Market Order. A Market Order is a buy or sell order to be executed immediately at current market prices. As long as there are willing sellers and buyers, market orders are filled. Market orders are therefore used when certainty of execution is a priority over price of execution. A market order is the simplest of the order types. Now lets move on to a Limit Order which is an order to buy or sell a stock at a specific price. A buy limit order can only be executed at the limit price or lower, and a sell limit order can only be executed at the limit price or higher. A limit order is not guaranteed to execute. Then we have a Stop Loss Order which is an order placed with a broker to buy or sell once the stock reaches a certain price. A stop-loss is designed to limit an investor's loss on a security position. Now lets look at the Stop Limit Order which will be executed at a specified price, or after a given stop price has been reached. Once the stop price is reached, the stop-limit order becomes a limit order to buy or sell at the limit price or better. These are just some of the order types when buying stock. To get more in depth information on what an order type is when buying stock and how to apply the order type -- click on the pictures below to read the articles.