Order types reference

The list of order types on a trading platform looks longer than it is. Underneath the names, an order answers only two questions. When does this instruction enter the market, and what price is it permitted to accept once it gets there. Every named type is one pairing of an answer to the first question with an answer to the second, and reading them that way makes the list short and the edge cases predictable.

Orders that enter the market immediately 

A market order enters at once and carries no price boundary. It instructs the venue to transact at the best price available on arrival, whatever that price turns out to be. It is the only order type that cannot be left unfilled by an ordinary market, and it is the only one that offers no protection against the price having moved since it was sent. Those two properties are the same property described from two directions.

A limit order also enters at once, but carries a price boundary the fill may not cross. A buy limit may be filled at its price or lower and a sell limit at its price or higher. Placed at a price the market has already passed, it behaves as an immediate order and fills straight away. Placed at a price the market has not reached, it rests in the book until the market comes to it, or until it expires. It can go unfilled while the market trades right up to its level and turns away, which is the exact cost of the protection it provides.

Orders that wait for a condition 

A stop order is dormant until the market trades at or through a stated level, and at that moment it becomes an order that enters the market. The level is a trigger, not a price boundary. A buy stop sits above the current price and a sell stop below it, which is the reverse of the limit convention and the source of most of the confusion between the two. The reversal is not arbitrary: a stop is an instruction to act once a move has already begun, so it is placed on the side the price would have to travel to.

What a triggered stop turns into decides everything about how it behaves afterwards. A plain stop becomes a market order, so it will fill, and the fill can be some distance from the trigger. A stop limit becomes a limit order at a stated price, so it will not fill beyond that price, and it can therefore go unfilled entirely while the market runs past it. The first accepts a worse price to guarantee a fill; the second accepts no fill to guarantee a price. Neither offers both and no platform setting creates a version that does.

A trailing stop is a stop whose trigger level is recalculated as the market moves. It follows the price at a stated distance in the favourable direction and does not move back when the price retreats, so the trigger ratchets one way only. Where the recalculation happens is a material detail: a trailing stop maintained on the platform stops trailing when the platform is not connected, while one maintained on the server continues regardless. The two are documented differently and behave differently overnight.

Attached and linked orders 

Most platforms allow orders to be attached to a position rather than standing alone. A stop attached to an open position closes it if the price moves through the trigger, and a limit attached to the same position closes it if the price reaches a favourable level. Because both are attached to the same position, filling either one should cancel the other, and the mechanism that does this is called a one cancels the other pair.

The cancellation is not instantaneous in a fast market, and the gap between one leg filling and the other being pulled is a real interval on some venues. Where both legs are triggered inside that interval, one of them can result in an unintended position in the opposite direction. Platforms document how they handle this, and the handling differs, which is why the behaviour is worth reading rather than assuming.

Orders can also be linked so that one only becomes active when another has filled. An entry order with an attached stop and limit is the common case: the two exit legs stay dormant while the entry rests, activate together when it fills, and are cancelled together if it is cancelled first.

How long an unfilled order survives 

Any order that does not fill immediately needs a rule for how long it persists, and that rule is its time in force. The setting is independent of the order type, so it is a second axis rather than a longer list of names.

• Good for day. The order is cancelled at the end of the trading day if it has not filled. What counts as the end of the day is defined by the venue, not by a local clock.
• Good till cancelled. The order persists across sessions until it fills or is cancelled. Firms usually impose a maximum age regardless, which is stated in the platform documentation.
• Good till date. The order persists until a stated date and time and is cancelled then.
• Immediate or cancel. Whatever quantity can be filled at once is filled, and the remainder is cancelled rather than left resting.
• Fill or kill. The order is filled in its entirety at once or cancelled in its entirety. No partial fill is possible.

The last two exist because a partial fill is not always an acceptable outcome, and they are the only way to say so at the point of submission. Everything else about them follows from that single distinction.

The two questions as a grid 

Laying the types out against the two questions they answer makes the family resemblance visible, and makes clear that the set is closed rather than open ended.

One consequence of the grid is worth stating plainly, because it is the trade off nothing in the list escapes. An order without a price boundary will fill and cannot control where. An order with a price boundary controls where and may not fill. Every named type sits somewhere on that line, and no combination of settings produces an order that is on both ends of it.