Order Types
Order Types
1
Market order
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Investor sends a Market order to buy 300 shares
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Market order is executed as follows: 250 at 25.2 and 50 at 25.5
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The remaining volume in order book at 25.5 is 150
Order Book | |||
Buy | Sell | ||
Volume | Price | Volume | Price |
100 | 25 | 25.2 | 250 |
85 | 24.9 | 25.5 | 200 |
25.6 | 100 |
Order Book | |||
Buy | Sell | ||
Volume | Price | Volume | Price |
100 | 25 | 25.2 | 150 |
85 | 24.9 | 25.5 | 150 |
2
Market to Limit order
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Investor sends a MTL order to buy 200 shares
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The MTL order is executed as follows: 150 at 25.2
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The remaining 50 not yet executed becomes a limit buy order at 25.2
Order Book | |||
Buy | Sell | ||
Volume | Price | Volume | Price |
50 | 25 | 25.5 | 150 |
85 | 24.9 | 25.6 | 150 |
Order Book | |||
Buy | Sell | ||
Volume | Price | Volume | Price |
50 | 25.2 | 25.6 | 100 |
100 | 25 | ||
85 | 24.9 |
3
Stop loss order
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When triggered it enters the book as a Market order. Stop orders are not visible in the order book until triggered!
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Investor bought 200 shares at 20 a few months ago
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The share price has reached 30 today, but the investor does not want to sell just yet, there may be a chance it rises further
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Nevertheless, the investor wants to safeguard his profit in the event the share price falls suddenly and he decides to enter a sell stop loss with a trigger price of 29: this means that if the share price does start to fall and reaches 29 the stop loss order will be activated and act as a sell market order. The order book situation is as follows
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Another investor sells 10 shares at 29, leaving 90 in the book This trade triggers the stop loss to activation
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The stop loss is executed as follows: 90 at 29, and 10 at 28.9
Order Book | |||
Buy | Sell | ||
Volume | Price | Volume | Price |
100 | 29 | 29.3 | 200 |
50 | 28.9 | 29.4 | 400 |
150 | 29.8 | 29.5 | 750 |
400 | 29.7 |
Order Book | |||
Buy | Sell | ||
Volume | Price | Volume | Price |
90 | 29 | 29.3 | 200 |
50 | 28.9 | 29.4 | 400 |
150 | 29.8 | 29.5 | 750 |
400 | 29.7 |
Order Book | |||
Buy | Sell | ||
Volume | Price | Volume | Price |
90 | 29 | 29.3 | 200 |
50 | 28.9 | 29.4 | 400 |
150 | 29.8 | 29.5 | 750 |
400 | 29.7 |
4
Stop limit order
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when triggered it enters the book as a Limit order
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Investor bought 500 shares at 20 a few months ago
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The share price has reached 30 today, but the investor does not want to sell just yet, there may be a chance it rises further
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Nevertheless, the investor wants to safeguard his profit in the event the share price falls suddenly and he decides to enter a sell stop limit with a trigger price of 29 and a limit price of 28.50: this means that if the share price does start to fall and reaches 29 the stop limit order will be activated and enter the book as a sell limit order at 28.50 The order book situation is as follows:
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Another investor sells 10 shares at 29, leaving 90 in the book This trade triggers the stop limit to activation
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The stop limit is executed as follows: 90 at 29; 50 at 28.9; 150 at 29.8 and 110 at 29.7
Order Book | |||
Buy | Sell | ||
Volume | Price | Volume | Price |
100 | 29 | 29.3 | 200 |
50 | 28.9 | 29.4 | 400 |
150 | 29.8 | 29.5 | 750 |
400 | 29.7 |
Order Book | |||
Buy | Sell | ||
Volume | Price | Volume | Price |
100 | 29 | 29.3 | 200 |
50 | 28.9 | 29.4 | 400 |
150 | 29.8 | 29.5 | 750 |
400 | 29.7 |
Order Book | |||
Buy | Sell | ||
Volume | Price | Volume | Price |
100 | 29 | 29.3 | 200 |
50 | 28.9 | 29.4 | 400 |
150 | 29.8 | 29.5 | 750 |
400 | 29.7 |
5
Iceberg (reserved) orders
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Iceberg orders are orders of which only a specified quantity is visible in the order book
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An investor decides to buy 20,000 shares at 50 in company ABC He indicates on the order that wants only 1,000 to be visible in the order book, the iceberg order he enters is only visible for 1,000 shares
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Every time the visible quantity is executed, another 1,000 of the investor’s order reappears in the orderbook, until the total quantity of 20,000 shares is filled
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The order book situation is as follows
Order Book | |||
Buy | Sell | ||
Volume | Price | Volume | Price |
1.000 | 50 | 50.1 | 250 |
300 | 49.5 | 50.2 | 5.000 |
50.3 | 87 |
6
Trading Safeguards - Examples of Static and Dynamic behavior
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Order book: • Reference price = 30 • Dynamic: +/- 3% [29,10 /30,90]
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A new order enters the market: • Limit order to buy 80 shares @ 31 • The order is partially executed: Trade for 10 shares at 30.30 Trade for 50 shares at 30.50
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Potential trade @ 31.00 is outside the Dynamic •The remaining part of the order is automatically rejected (buy 20 shares at 31.00) •The Dynamic and Reference price are not updated. The order book remains open for all members •The member can either: confirm the order – resulting in a trade for 20 shares @ 31 do nothing – resulting in the order being rejected completely, no further trade
Buy | Sell | ||
Volume | Price | Volume | Price |
100 | 30,20 | 30,30 | 10 |
70 | 30.0 | 30.0 | 50 |
200 | 29,95 | 31,00 | 100 |
31,00 | 100 |
Buy | Sell | ||
Volume | Price | Volume | Price |
100 | 30,20 | ||
70 | 30.00 | ||
200 | 29,95 | 31,00 | 100 |
31,00 | 150 |