Conditional orders are a useful tool for stock traders in Singapore, allowing them to benefit from market conditions without having to constantly monitor their accounts. They allow investors to set parameters regarding the price at which they would like to enter or exit a position and determine when and how their order should be executed.
These orders come in different types including Stop Loss, Limit, One Cancels Another (OCO), Trailing Stops/Stops Limits and more. This article will explore the different conditional order types available and explain how traders can use these advanced order types in stock trading. To learn more about stock trading, you can visit Saxo Bank Group.
What are the types of orders?
Stop loss orders are designed to protect against a sudden market decline by closing a position if it falls below a predetermined level. This type of order is beneficial for traders who want to limit their risk because it helps them set a “stop loss” limit that they are willing to accept in the event of an unexpected market decline.
Limit orders allow investors to place a trade below or above the current market price. These stock orders can be used to take advantage of favorable pricing to ensure investors do not miss opportunities when stocks become available at advantageous prices. Limit orders also protect against sudden market movements and allow investors to limit their potential losses if stocks move in opposite directions.
One Cancels Other (OCO) orders combine two conditional orders into a single order execution. With this order type, two orders are placed but only one is executed. It is often used when investors want to limit their potential gains or losses, as it allows them to benefit from favorable prices while limiting their risk if stocks move in the opposite direction.
Trailing stops/stop limits provide additional protection for investors who want to protect themselves from sudden market movements while locking in profits. This type of order allows investors to set a predetermined stop loss percentage to trigger an exit once the stock price falls below a certain percentage based on the current price, allowing it to rise (or fall) according to the stock movement.
Other types of stock market orders
Investors may also use types other than those mentioned above with respect to stock orders. For example, market orders are placed with a broker to buy or sell securities at the current market price. These orders allow for quick execution but do not guarantee specific prices or execution times as prices can fluctuate very quickly.
Another type of order is the fill or remove order (FOK), in which a broker must immediately execute an order at the specified price or cancel it completely. This order is generally used when traders want to ensure that their orders are executed with minimal slippage and maximum security.
There are also “Day” and “Good Until Canceled” (GTC) orders, which offer more flexibility to investors who want to stay in a position for a longer period of time. For daily orders, brokers must execute them within one trading day before they automatically expire. General terms and conditions orders expire as soon as the investor cancels them manually or a predetermined date passes.
Investors seeking even greater control over their trading can use linked orders to set specific entry/exit levels by setting the bid/ask spread or limit/stop price around a specific level depending on conditions . From the market.
There are also options such as support orders that allow traders to place multiple conditional orders such as stop loss orders and limit orders each around a single entry order to protect against losses and at the same time when possible to secure profits.
These different types of stock orders provide investors with different ways to enter and exit positions in their portfolio investments, giving them greater control in directing their trading decisions according to their risk tolerance and investment objectives.
Final words
Stock traders have several order types available to them to maximize their trading potential and protect themselves from risk. Stop-loss orders help limit losses, while limit orders allow investors to take advantage of favorable prices as they become available. One Cancels Other (OCO) orders combine two conditional orders into a single execution. Trailing stops and limits protect against sudden market movements while securing profits. By utilizing the various advanced order types available, traders can gain greater control over their trades and increase their chances of profitability.