Placing Orders

The types of orders most commonly used are briefly described below. Orders can be placed as Good Til Canceled (Open Orders) or Day Orders. Of course Market Orders are neither, they are filled ASAP.

Market Order

The market order is the most frequently used order and is the best order to use if you want to have an order filled ASAP. The market order is executed at the best possible price obtainable at the time. EXAMPLE: A sell order at the "market" might be: "Sell 5 December Corn at the Market".

Limit Order

The limit order is an order to buy or sell at a designated price. Limit orders to buy must have a price below the last trade while limit orders to sell must have a price above the last trade. Because the market may never reach a limit price the order may be unable. Even though you may see the market touch a limit price several times, this does not guarantee a fill. In most instances, the market must trade through the limit price to receive a fill. EXAMPLE: Let's assume December Corn last traded/settled at 640. A limit order to buy might read "Buy 3 December Corn at 632". A limit order to sell might be "Sell 3 December Corn at 646.5.

Stop Order

Stop orders can be used for three purposes:

  1. to minimize a loss on a long or short position,
  2. to protect a profit on an existing long or short position, or
  3. to initiate a new long or short position.

A buy stop order must always be placed above the market and a sell stop below the market. Once the stop price is touched, the order is treated like a market order and will be filled at the best possible price. EXAMPLE: Let's assume December Corn last traded/settled at 640. A buy stop order might read "Buy 3 December Corn at 649 stop." A sell stop order might be "Sell 3 December Corn 631.5 stop."