Order (exchange)

An order is an instruction to buy or sell on a trading venue such as a , bond market, commodity market, or financial derivative market. These instructions can be simple or complicated, and can be sent to either a broker or directly to a trading venue via direct market access. There are some standard instructions for such orders.

A market order is a buy or sell order to be executed immediately at current market prices. As long as there are willing sellers and buyers, market orders are filled. Market orders are therefore used when certainty of execution is a priority over price of execution.

A market order is the simplest of the order types. This order type does not allow any control over the price received. The order is filled at the best price available at the relevant time. In fast-moving markets, the price paid or received may be quite different from the last price quoted before the order was entered.

A market order may be split across multiple participants on the other side of the transaction, resulting in different prices for some of the shares.

A limit order is an order to buy a security at no more than a specific price, or to sell a security at no less than a specific price (called "or better" for either direction). This gives the trader (customer) control over the price at which the trade is executed; however, the order may never be executed ("filled"). Limit orders are used when the trader wishes to control price rather than certainty of execution.

A buy limit order can only be executed at the limit price or lower. For example, if an investor wants to buy a stock, but doesn't want to pay more than $20 for it, the investor can place a limit order to buy the stock at $20. By entering a limit order rather than a market order, the investor will not buy the stock at a higher price, but, may get fewer shares than he wants or not get the stock at all.

A sell limit order is analogous; it can only be executed at the limit price or higher.

A limit order that can be satisfied by orders in the limit book when it is received is marketable. For example, if a stock is asked $86.41 (large size), a buy order with a limit of $90 can be filled right away. Similarly, if a stock is bid $86.40, a sell order with a limit of $80 will be filled right away. A limit order may be partially filled from the book and the rest added to the book.

Both buy and sell orders can be additionally constrained. Two of the most common additional constraints are fill or kill (FOK) and all or none (AON). FOK orders are either filled completely on the first attempt or canceled outright, while AON orders stipulate that the order must be filled with the entire number of shares specified, or not filled at all. If it is not filled, it is still held on the order book for later execution.

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