When it comes to investing in the stock market, there are several different types of orders that you can place to buy or sell shares. In Australia, the most common stock orders include market orders, limit orders, stop-loss orders, and trailing stop-loss orders.
Market Orders
You can place a market order to buy or sell shares at the current market price. This type of order is typically used when investors want to buy or sell shares quickly and are not concerned about getting the best possible price. The benefits of this order type include that trades are usually executed quickly, and there is no need to set a price. However, the drawback is that you may not always get the price you want, and it can be challenging to predict the market price when your order is placed.
Limit Orders
A limit order is buying or selling shares at a specific price. This type of order gives investors more control over their investments as they can choose how much they’re willing to sell their shares for or pay for them. The benefits of this type of order include knowing exactly how much you will pay or receive for your shares. However, the drawback is that you may not be able to execute your trade if the share price does not reach your specified price.
Stop-Loss Orders
A stop-loss order is an order to sell shares when they reach a specific price. This type of order is typically used by investors who want to limit their losses on a particular investment. This type of order’s benefits includes that it can help you protect your capital and limit your losses. However, the downside is that your broker may sell your shares at a lower price than you anticipated.
Trailing Stop-Loss Orders
A trailing stop-loss order is an order to sell shares when they fall below a specific price. This type of order is typically used by investors who want to lock in profits on a particular investment. The benefit of this is like that of the stop-loss order in that traders will be able to protect their capital and mitigate their risks. The downside is somewhat similar too – traders may end up selling their shares at a lower price than anticipated.
How to place a stock order
Choose the order you want to place
The first step in placing a stock order is choosing the type of order you want. There are several types of orders, each with its benefits and drawbacks.
Choose the shares you want to buy or sell
Once you have chosen which order you want to place, you need to choose the shares you want to buy or sell. You can do this by selecting the company from a list of shares on a stock exchange website or by using a stockbroker.
Enter your order
After choosing the shares you want to buy or sell, you need to enter your order. You can do this online or on the phone with a stockbroker. When placing your order, you will need to specify the type of order, how many shares you want to buy or sell, and the price you are willing to sell or pay.
Wait for your trade to be executed
Once you have placed your order, you must wait for your trade to be executed. It can take a few minutes or days, depending on the type of order you have placed. After your broker has executed your trade, you will receive confirmation of the transaction from your broker.
Advantages of placing stock orders
You can buy or sell shares quickly
One of the main advantages of placing a stock order is that you can buy or sell shares quickly because your broker will execute your trade as soon as the market opens. You also do not need to wait for a broker to find a buyer or seller for your shares.
You know how much you will pay or receive for your shares
Another advantage of placing a stock order is knowing exactly how much you will pay or receive for your shares because you set the price when you place your order.
You can trade stocks with Saxo Bank.
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