The type of order defines how an order behaves in the market and can be used in various contexts, from stock trading to purchases. Here are the details of common types of orders:
1. Market Order: This type of order is executed immediately at the best available price. It is useful for ensuring immediate execution, but the price may not be the most favorable.
2. Limit Order: With this order, you specify the price at which you are willing to buy or sell. The order will only be executed if the market price reaches that level.
3. Stop Order: This order is triggered when the stock reaches a certain price (stop price). Once triggered, it becomes a market order, meaning it will be executed at the prevailing market price, which may not be the stop price.
4. Stop-Loss Order: A type of stop order designed to limit potential losses. It is used to automatically sell the stock when it reaches a specified price.
5. Bracket Order: This type of order combines a main order with a take profit order (to lock in profits) and a stop-loss order (to limit losses).