Chaptere 14: The Basics of Trading a Stock: Know Your Orders Flashcards
A _______________ is the most basic type of trade. It is an order to buy or sell immediately at the current price.
market order
Typically, if you are going to buy a stock, then you will pay a price at or near the posted ____.
ask
If you are going to sell a stock, you will receive a price at or near the posted ______.
bid
are popular among individual investors who want to buy or sell a stock without delay.
Market orders
do not guarantee a price, but they do guarantee the order’s immediate execution.
Market orders
sometimes referred to as a pending order, allows investors to buy and sell securities at a certain price in the future.
limit order
In effect, a __________ sets the maximum or minimum price at which you are willing to buy or sell.
limit order
This type of order is used to execute a trade if the price reaches the pre-defined level; the order will not be filled if the price does not reach this level.
limit order
four types of limit orders
- Buy Limit
- Sell Limit
- Buy Stop
- Sell stop
an order to purchase a security at or below a specified price.
Buy Limit
an order to sell a security at or above a specified price.
Sell Limit
an order to buy a security at a price above the current market bid.
Buy Stop
an order to sell a security at a price below the current market ask.
Sell Stop
to buy becomes active only after a specified price level has been reached
stop order (known as the stop level).
is also referred to as a stopped market, on-stop buy, or on-stop sell, this is one of the most useful orders.
Stop-Loss Order
This order is different because, unlike the limit and market orders, which are active as soon as they are entered, this order remains dormant until a certain price is passed, at which time it is activated as a market order.
Stop-Loss Order
These are similar to stop-loss orders
Stop-Limit Order
There are two prices specified in a stop-limit order: .
- stop price
- the limit price
which will convert the order to a sell order
stop price
Instead of the order becoming a market order to sell, the sell order becomes a limit order that will only execute at the limit price or better.
Stop-Limit Order
This type of order is especially important for those who buy penny stocks.
all-or-none order
This can mitigate a potential problem with stop-loss orders, which can be triggered during a flash crash when prices plummet but subsequently recover.
Stop-Limit Order
ensures that you get either the entire quantity of stock you requested or none at all.
all-or-none order
mandates that whatever amount of an order that can be executed in the market (or at a limit) in a very short time span, often just a few seconds or less, be filled and then the rest of the order canceled.
IOC order
True or False
If shares are traded in that “immediate” interval, then the order is canceled completely.
False
If no shares are traded in that “immediate” interval, then the order is canceled completely.
This type of order combines an AON order with an IOC specification;
Fill or Kill (FOK)
in other words, it mandates that the entire order size be traded and in a very short time period, often a few seconds or less. If neither condition is met, the order is canceled.
Fill or Kill (FOK)
This is a time restriction that you can place on different orders.
Good ‘Til Canceled (GTC)
will remain active until you decide to cancel it.
Brokerages will typically limit the maximum time you can keep an order open (or active) to _______.
Good ‘Til Canceled (GTC); 90 days
This means that after the end of the trading day, the order will expire. If it isn’t transacted (filled) then you will have to re-enter it the following trading day.
Day
sometimes called a profit target Execution of a ____________ closes the position.
take profit order
is intended to close out the trade at a profit once it has reached a certain level.
take profit order
This type of order is always connected to an open position of a pending order.
take profit order
True or False
Not all brokerages or online trading platforms allow for all of these types of orders.
True
Who are you?
A CPA, RMT, MD, ATTY, MBA, & has 3 certifications is belt (CFMP, CAEA, CATA)
