Wouldn’t it be great if we could always place a conditional order? “I’ll take the spaghetti if it comes with sausage imported from Italy.” Or, “I’ll buy these shoes if they have an orthotic built in.”
Savvy traders in the stock market like to place conditional orders with specific criteria, such as a stop order (an order to buy or sell a stock once it reaches a specified price), a limit order (an order to buy or sell a stock at a specific price or better), or a stop limit order (like...a stock currently trades at $40 and you’d like to sell if it goes below $39, but only if it can be sold for $38 or more). In other words, in a conditional order, traders state certain prices that a stock has to reach before they'll buy or sell, not just the first available price. They might also state that the stock has to reach a certain volume, or be available at a price for a certain length of time, or hit a percent change.
Another type of conditional order is called one-cancels-other. Here the trader can place several conditional orders, and when one hits the specified criteria, the order executes and automatically cancels all the other orders. An order-sends-order is kind of the opposite; when one order is executed, it triggers more orders to be placed.
Let’s say Tracy Trader has been following a certain stock and believes it's about to go down in price. She places a conditional order to buy a put option (predicting the price will go down) once the stock hits $20. Her conditional order would be to buy the put option when the underlying stock goes down to $20.
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Finance: What are Limit Order, Sell Limi...7 Views
Finance a la shmoop what is a limit order? you want to sell a thousand shares
of Colonel electric it was demoted after they cut their dividend the shares have [Scissors cuts dividend in half]
been trading wildly between $15 and $25 a share you don't want to feel like a
moron for having sold them at fifteen bucks when six weeks later they kissed
25 with tongue so what do you do well you put in a limit order that is you put
a limit of a minimum price of 25 bucks a share for Colonel Electric such that [Pile of stocks appear]
those shares will simply sit in your account unsold maybe forever until
somebody out in the wild blue yonder of Stockland is willing to pay twenty five [Woman standing at a colonel electric stand]
dollars or more for the shares where you have a minimum price limit of 25 bucks a
share in your order so here's to hoping they sell and don't get further demoted [Man carries stock into car]
Sargent Electric is just a place you don't want to go
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