Different Types Of Orders For Futures Markets?

[kyle 10]

I am a newbie trader looking to get started in the futures markets. I have some trouble understanding the different types of orders available. Is there anywhere I can look for reference on the different types of orders and the definition for them? Thank you in advance.

[Soultrader 12]

Types of Orders:

 

1. Market Orders - This order should be used when you deman instant execution. You send out an order to get filled at the next available price.

 

2. Limit Orders - This type of order should be used to specify a certain price you are interested in getting filled. You will be filled at your stated price or better. The advantage is that you know exactly at what price you will get filled. The disadvantage is that there is a chance you will not get filled and miss a move.

 

A limit order to buy is set below the current market price. A limit order to sell is placed above the current market price.

 

3. Market If Touched (MIT) - A MIT order becomes a market order as soon as price reaches a certain level. So let's say you had a MIT order to buy stock XYZ at $5. As soon as stock XYZ reaches $5, this becomes a market order.

 

An MIT order to buy is placed below the current market price. An MIT order to sell is placed above the current market price.

 

4. Stop Order - This order is commonly used to protect losses. As soon as price hits a certain level, the stop order turns into a market order. A stop buy order is placed above the current market price. So if you were short and had a stop order above your entry point, as soon as price hits this level it turns into a market order. A stop sell order is placed below the current market price.

 

5. Stop Close Only Order (SCO) - The order is executed if the markets trades at the stated price or worse during the closing range.

 

A sell SCO order is only executed if price is trading at the stated price or lower during the closing range.

 

A buy SCO order is only executed if price is trading at the stated price or better during the closing range.

 

6. Stop Limit Order - This is similar to a stop order. But instead as soon as price hits your stop, it turns into a limit order. The advantage is you know the worst possible fill you can receive. The disadvantage is you may not get filled and could see your losses grow.

 

7. Order Cancels Order (OCO) - One order cancels another. If you decide to place a stop and a target point, when either order is filled the other order will be automatically cancelled. This is a very convenient type of order.

 

8. Contingency Order - Often referred to as an "if-then" order. An example would be to tell your broker to exit stock XYZ at $5 with a stop at $4. Instead of risking a double fill, a contingency order will tell the broker to do both things.

 

9. Trailing Stop - This type of order is designed to lock in profits or trail your stop orders. If you want to raise your stop every time the market lifts by 10 points, you will use a trailing stop 10 points below the current market price.

 

10. Not Held - In volatile conditions, an exchange can announce that all orders be not held. This is an exception but happens when market conditions are wild. Basically all limit, stop, and market can not be held at a certain price. Due to market conditions, all orders may be difficult to get filled at a designated price including market orders.

 

11. Good Until Canceled Order (GTC) - This type of order remains valid until cancelled or filled.

 

12. Spread Order - A spread order involves buying one type of contract and selling another. A buyer of a spread gains if the spread between the two contracts widens. A seller of a spread gains if the spread between the two contracts narrows.

[artp01 10]

Thank you soultrader for giving this valued details. So one has to keep these many orders in mind. I am worrying whether i will be able to keep these things in mind, may be along with experience this will be done.