Order Type     

 

Market: An order to buy or sell securities at the next available/prevailing "market price." The intent of a market order is to trade quickly, without certainty as to price.

 

Limit: An order to buy or sell securities at a stated price or better. Limit orders help control the price at which an order is executed. For a buy limit order, the order is to buy at a stated price or less. For a sell limit order, the order is to sell at a stated price or greater.

 

Stop: (also called a Stop Loss order): A market order to buy or sell a security, triggered only if the security reaches or surpasses a stated price (called the "stop" price). If a stop order is triggered, the resulting market order executes at the next available market price. Stop orders can serve to lock in gains or minimize losses.

 

Stop Limit: An order, which combines the trigger function of a stop order with the price control of a limit order. If the stop price is reached, a limit order is triggered to buy or sell at the stop price or better (the stop and limit price are the same). Stop limit orders can help to mitigate the price uncertainty associated with stop orders.

 

Important Information about Stop and Stop Limit Orders:

 

    Buy stop orders and buy stop limit orders must be entered at a price above the current market price.

    Sell stop orders and sell stop limit orders must be entered at a price below the current market price.

 

Trailing Stop Orders (Four Types): A buy or sell stop or stop limit order for which the trigger price automatically trails (adjusts) to follow current prices for a security. Trailing stop trigger prices are only adjusted for favorable price changes. If a security's price moves unfavorably and reaches the stop price, a market or limit order is triggered.

 

For buy trailing stop orders, the trigger price decreases as the price of the security decreases.

 

For sell trailing stop orders, the trigger price increases as the price of the security increases.

 

Depending on security type (discussed below), the following four types of trailing stop orders may be selected:

 

Trailing Stop Loss ($) sets a stop order at a designated dollar amount away from the Last, Bid, or Ask price of a security. If the stop price is reached, a market order is triggered.

 

Trailing Stop Loss (%) sets a stop order at a designated percentage of the Last, Bid, or Ask price of a security. If the stop percentage is reached, a market order is triggered.

 

Trailing Stop Limit ($) sets a stop limit order at a designated dollar amount away from the Last, Bid, or Ask price of a security. If the stop price is reached, a limit order is triggered to buy or sell at the stop price or better (the stop and limit price are the same).

 

Trailing Stop Limit (%) sets a stop order at a designated percentage of the Last, Bid, or Ask price of a security. If the stop price is reached, a limit order is triggered to buy or sell at the stop price or better (the stop and limit price are the same).

 

Important information about Trailing Stop orders:

 

    Trailing stop orders for equity securities (stocks) can be entered as a dollar amount ($) or percentage (%) of the Last, Bid, or Ask prices of an equity.

    Trailing stop orders for options can be entered only as a dollar amount ($) of the Last, Bid, or Ask prices of an option.

    Dollar trail amounts can be entered to two decimal places.

    Percentage trail amounts must be entered in whole percentages.

    The following securities are not eligible for trailing stop orders: bulletin board, pink sheet, mutual funds, and fixed income securities.

    Trailing Stop orders are monitored between 9:30 a.m. and 4 p.m. ET and are held on a separate order file until triggered, at which time they are sent to the marketplace. Orders can be triggered based on the security's last round lot trade of 100 shares or greater, Bid, or Ask, but may have increased risks due to their reliance on trigger processing, market data and other internal and external system factors.

1.When a stock's price drops 10% to 15% from a recent high.

 

2.If some problem arises in the industry or the company.

 

3.If the stock price has stagnated. Why not sell it and buy something else that might shoot up?

 

4.The stock's P/E is higher than others in the same industry...and you can't explain why it's out of sync.

 

5.In general, earnings are falling for the company or the industry.

 

6.The company has cut its dividend.

 

7.A key manager leaves and the new manager seems lost. (i.e. Can't clearly articulate the vision for company growth and profitability, reluctant to make needed changes, from a totally different industry)

 

8.The stock price falls below $10 a share.

 

9.The company's sales margins and return on equity look bad compared to other similar companies.

 

10.The company is about to embark on a large "boneheaded" acquisition. i.e. AOL acquires TimeWarner.

 

11.The company itself has been acquired and the acquisition makes no sense.

 

12.You discovered the stock sometime ago and enjoyed a nice price run-up but now the stock has been discovered by the world. Now where will new buyers come from to drive up the price?

 

13.Key managers in the company start to sell a huge amount of stock. Or they start to buy puts to protect their stock if the price falls.

 

14.When the company's sales are on the decline and key management tries to revise their bonus plan. Fire the bums or sell the stock.

 

15.Declining earnings growth. The company's earnings growth has drastically slowed from the previous year. An EPSG% less than 20%.

 

16.The company continues to or has started to burn cash. When a company uses more cash than it makes, it's just a matter of time before the ACE BOARDUP trucks arrive and the company shuts down.

 

17.The company is just too big sustain stellar growth...once a company explodes past the ten billion sales mark, it's hard to grow at the same pace it did in the pre-ten billion dollar years. It might be time to find another rising star unless it is pretty obvious the company can hit at 15% EPSG. (i.e IBM, HPQ, AMZN)

 

18.A boneheaded new product announcement. i.e A leading personal computer operating system company decides to make a foray into operating systems for copy machines.