CTS Lesson 5: Different Types Of Orders.

Sometimes every

minute can count and

knowing the type of

order you need to

place and placing it

accurately can be

crucial.

Different Types of Orders

By: Lan Turner

Being familiar with orders and properly placing them is very important to your trading success. With

quickly changing market conditions, sometimes every minute can count and knowing the type of

order you need to place and placing it accurately can be crucial. Communication is the key. If you

have questions about the different types of orders and how to use them, call your broker for

assistance.

The Market Order

The most common order. This order initiates the trade at the current market value-taking the bid if

trying to sell and the ask price if trying to buy.

The Limit Order

This order initiates the trade at a specific price 'or better' if able. For example, buying 1 August Lean

Hog at 8202 means the client will be long only at 8202 or less. Traders should note the market may

hit the limit price and yet not fill the order.

The Stop Order

This order becomes a market order only when the specified price level is reached. A buy stop is

placed above the market and a sell stop is placed below the market.

MIT (Market If Touched)

This order is similar to a stop order in that it is executed only if the price reaches a specified level.

The difference is an MIT to sell is placed above the market and an MIT to buy is placed below.

GTC (Good Till Canceled)

These orders, often called open orders, are always considered active orders until filled, canceled, or

replaced by another order.

FOK (Fill Or Kill)

These orders are limit orders sent to the pit to be executed immediately or canceled.

MOC (Market On Close)

These orders are executed within 30-60 seconds of the close and must be within the closing range

of prices.

Straight Cancel

This completely eliminates a previously placed order.

Cancel/Replace

This cancels and replaces a previous order by changed the price, type, or quantity.

It should be noted that not all exchanges accept all types of orders and individual floor brokers may

not accept all types of orders. The types of orders that are accepted are subject to change without

notice. Keep in touch with your broker on these changes.

The Trading Log

Consider keeping a trading log. For one thing, it helps you keep track of your outstanding orders. It

is not uncommon for traders to exit markets but leave profit taking orders or stop/loss orders

unchecked.

You are ultimately responsible for all orders placed so manage them with a high attention for detail.

A log can consist of the date the order was placed, what type of order, buy or sell, quantity, name,

price the order was placed, strike price, date you entered the market, price you entered the market,

price you exited the market, and profit/loss totals.

You may also wish to add an additional 'notes' section that helps keep you on track with your trades.

You can make notes when an indicator is showing a breakout may not be confirmed, or make

comments reflecting a change in your trailing stop when a specific price is reached. A trading log can

be a very powerful tool for monitoring the accuracy of your orders. In addition, it can help you keep

your trading plan in check.

The Process

Know where the market is trading. Often times, traders will place orders that are already "through

their price." In addition, if you are placing orders after market hours, be aware that the market can

open anywhere within the daily trading limits (if trading limits exist in that market)

State your name and account number

Specify a buy or sell

State the quantity

Specify the market

Specify the month and, if applicable, the strike price if it is an option order.

Specify what kind of order you are placing (i.e. limit, Stop, MIT, etc.)

Include any special instructions such as if you are filled-where you would like a stop loss and/or

profit taking placed.

Some Example Orders

This is John/Jane Doe...

For account 82912-I would like to place an order to buy 1 September bond at the market. If filled

place a stop loss at 118-25

For account 82912- I would like to place an order to buy 2 July wheat 360 calls at 4 cents. GTC.

For account 82912-I would like to place an order to sell 1 Feb live cattle at 7050 on a stop. Day only.

For account 82912-I would like to place an order to sell 1 March orange juice at 8590 GTC.

This publication is strictly the opinion of its writer and is intended solely for informative purposes and

is not to be construed, under any circumstances by implication or otherwise, as an offer to sell or a

solicitation to buy or trade in any commodities or securities herein named. Information is obtained

from sources believed to be reliable, but is in no way guaranteed. No guarantee of any kind is

implied or possible where projections of futures conditions are attempted.

Futures trading involves risk. In no event should the content of this market letter be construed as an

express or an implied promise, guarantee or implication by or from Michael Weaver or LIT First

Division of First Options of Chicago, Inc. that you will profit or that losses can or will be limited in any

manner whatsoever. No such promises, guarantees or implications are given. Past results are no

indication of futures performance.

A trading log can

assist you in many

ways during your

paper trading and

your real trading.

If you are placing

orders after market

hours, be aware that

the market can open

anywhere within the

daily trading limits.

Futures Traders Helping Future Traders