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Stock Exchange: Order Supplements when Buying Securities

Info by Never Rich Enough | 28.05.2012 at 17:55

When buying securities, you are adding an order supplement to your order characterizing more precisely under which conditions the order should be executed.

We distinguish the following types of buying orders:

  • Market Order: Market Order is an ulimited order. That means, that no limit is specified, to which price it should be purchased at the most. Instead, with this order type, immediately a fitting sell offer is looked for and if there is one, it is used. Under circumstances, by using this order type, you have to pay a higher price than the current market value, because otherwise no suitable offer for sale could be found.
  • Limit Order: Together with a limited buy order, you have to specify a price to which it should be purchased at the most. Once the market price drops to or below your specified price and there is a suitable partner for selling, the order is executed. The advantage is that you do not have to spend more money than you have previously defined. The disadvantage is that if no one could be found to sell under your conditions, the order cannot be executed.
  • Stop Buy: The trading option "Stop Buy" executes an order, if the price exceeds a certain value. So you can specify for example that you want to buy when the price reaches a value of 10,00 €. For values less than 10,00 € with "Stop Buy" no order is executed. The sense in "Stop Buy" is that you can almost jump on the moving train. Once the stock starts to rise (supposedly), you are there. Stop Buy orders can be both unlimited and limited (Stop Buy Limit). If a Stop Buy is unlimited, on reaching the defined price, a Market Order is triggered, if it is limited, a Limit Order.
  • Trailing Stop Buy: "Trailing Stop Buy" is a dynamic trading option that works just like a normal "Stop Buy" with the difference that the defined price is always adapted to the current exchange rate. Once the current exchange rate falls by a certain price (which you can specify before), the limit is also decreased by a definable range (for example percentage). This game remains active until you delete the order or the price grows above your specified limit, so that the order can be executed.

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