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When it comes to buying and selling stock, you may be familiar with the most basic order type – the market order. While the market order is widely used, there are various other stock orders you should know about when trading stocks on the Philippine Stock Exchange. Below are some useful BDO Securities market orders.
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General orders
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Market Order
The market order is the most commonly known stock market order type. This order is used to execute a trade as quickly as possible. With a market order, the stock is traded at the current market price and no price parameters are set as a guide to executing the trade.
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Limit Order
The limit order is another commonly known stock market order type. Unlike the market order, the limit order specifies a price the stock should trade. If a limit price is set and the stock does not meet the predetermined price, the trade will not be executed. A limit order will only be executed when the price is in the predetermined range.
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Orders based on the duration of time
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Unlike market and limit orders, the following orders all share a time factor associated with executing a trade.
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Market on open/close order
The market on open and market on close orders are only executed at the pre-open and pre-close time periods during the trading day. The pre-open period lasts from 09:00 AM -09:29 AM daily. The pre-close period is based on the market-runoff period which is 03:20 PM –03:30 PM.
Market on open and market on close orders are market orders executed at the opening or closing price of the stock. Â
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DAY
A DAY order is an order that is good for the trading day. If a DAY order is not able to be matched and executed within the trading day it will be canceled.
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GTC (good-till-canceled)
A good-till-canceled (GTC) order will stay in effect until the order is executed or canceled. If the order is not executed during a day, it will carry over until it is either executed on a different date, canceled by the trader, or the security reaches the set expiration date of the security.
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GTD (good-till-date)
A good-till-date (GTD) order will stay in effect until the order is either executed or the predetermined date is met.Â
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FAK (fill-and-kill) Â
The fill-and-kill (FAK) order also known as "Execute-and-Eliminate Order" requires that any remaining unexecuted portion of a FAK order is eliminated.
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Orders based on volume
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Minimum quantity order
A minimum quantity order must meet a minimum specified quantity as well as be executed immediately. If the minimum quantity is not met the order will not be executed.
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Iceberg Order
An iceberg order is a large quantity order grouped into smaller orders. Because a large order can have an effect on the trading price of the security, one group of smaller orders is revealed to the market until sold. Then the next group or orders is revealed until sold. This continues until all groups (tranches) of orders are filled.
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Knowing the different order types can help you achieve specific trade strategies and further your investment performance. If you’re not yet a BDO Securities customer, don’t forget to sign up for an account below.
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