FRM: Order Types (market, limit, stop, stop-limit)
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- čas přidán 11. 07. 2010
- Market order: guaranteed fill, but not price. Limit order: guaranteed "or better" price, but not fill. Stop: After price trigger reached, becomes market. Stop-limit: After price trigger, becomes limit order. For more financial risk management videos visit our website at www.bionicturtle.com!
I'll probably have to watch this video 50million times to try to fully understand the logic of all this, but it's still the best video I've seen yet. Thank you!!!!
Hi Nikkie, LOL, thank you, I recorded it, and I still have to refer to it occasionally because I haven't mastered it. Actually, this weekend I put in my first ever limit order (heretofore I had only used market orders) so i I have yet myself to have found a need to execute a stop (much less a stop-limit) but I'm a conservative investor not a trader so ...
Bionic Turtle and I'm pretty new to the market so I'm just searching for much as I can, specifically this topic. This was so easy for me to understand and trust me I've been searching lol
I'm in the same boat. 😄 Already watched it twice.
They try to make it hard. Many words can be changed to simpler vocabulary. I think it's because they didn't want the public to understand the inner workings of trading.
Agree - have watched quite a number to try to get my head around it and this one helped a lot. Good video, thanks!
This is the best explanation of market, limit, stop and stop-limit that I have seen so far. Thanks a million.
+FKeith Arline You're welcome! We are glad it was helpful!
I finally get Limits and Stops!! I've watched so many vids and never got a real understanding of the distinction between limits and stops. Now I do. Your illustrations really helped. Thanks so much!
It is still confusing for two reasons.
One, it assumes that the price rises on the buy. So people say, why would I buy higher. To show this, the buying need to be shown below the market price. So the buy limit $28. So as the price drops, it reaches $28, the buying executed.
The other problem is that while in most places you are saying it right, the order sent to the market, I think in the first part you say the order will be filled above that price. Unfortunately it will only be filled if someone is willing to buy it or in the case of a buy, if someone is selling it. The market price is the last price but it does not guarantee that it will not turn around as the next buying is not willing to pay that price. I don't know if all this can be shown on one graph.
TD also calls the Stop order, Stop-market order. :)
He should have out the sells on the top of the line and buys on the bottom ;)
Simple video to understand. Thanks
Because it is incorrect in this video. It does not work this. In case of buy stop limit order the stop limit level triggers the order and the price will be lower to buy cheaper than the trigger level in a down-tick. The short version is also vice-versa.
Yep. Definitely the clearest explanation I've seen thus far on this. The ambiguity that other videos left on the distinction between a stop and a limit is rather maddening in retrospect. You've got a new subscriber. Thanks for the time that you put into this!
Best explanation so far and beautifully done too, I keep coming back to it, over and over again
Thank for such a kind comment
This is the best explanation of order types that I’ve seen. I have watched more than 10 CZcams videos on this topic and it still was not clear. This was so straight forward, the words, the great graphics and this great instructor made it all clear. I subscribed !!
Exactly what I came to say!
@wcoy79 glad you liked it, thanks for your comment! David
This is the first set of trader videos I've stumbled across that's actually helpful with explaining things. From a newbie with the capital to justify this lifestyle, thank you so much.
How has your trading gone? I am a newbie now 😄
Best Explanation I have seen so far!
Thank you.
This is the most concise and best explanation I have found. Thank you!
Probably the clearest explanation I could find for these concepts. Thanks.
There is an information overload one searches over these topics online. But the key understanding of these concepts are clear when one can really differentiate and compare between each entity. Your explanation about the uncertainty of price with certain orders and how you lock with limit is the best Ive seen so far. The pictorial diagram really helped.
Thanks
Wait, if it's at $30, why would you want to buy at $35 and sell at $25?
He is talking about a situation when the price rises. Some people buy when the price rises. We like to buy when it falls but it can't be shown on one graph.
I'm assuming these are exaggerated example figures to illustrate his point
Never assume! We want to limit losses. Buy at $30. Stop, or don't buy when price reaches $31. Sell to stop losses (if price goes below $30) at $29. This says we're only comfortable losing $1 below purchase price. Or, sell when price reaches our desired gain of $33 per share. Recap: Scenario #1 has us selling to stop losses at $29. Scenario #2 has us selling when our desired gain is reached.
These mechanisms are vital for the health of your wealth. Not using them risks losses far beyond what was outlined in above video. Stocks do reverse directions without notice. I don't know of many people who can absorb a $5 to $10 loss per share and still be happy. Protect your investment by knowing how to input these safeguards on every stock position.
Yeah, I thought you buy low and sell high not buy high and sell low?
@@samsturmer1659 it's shown this way because he's trying to fit all the possible scenarios in one page.
I am a beginner and a lot of time I only use market order to buy stocks. Ihave tried to learn the different among limit, stop, and stop limit. Your explanation is more understanding than others. Now I feel more confident to use these orders.
bionicturtle, I just wanted to says thanks for covering all these finance topics that are tough to find educational videos on!
Amazing explanation and breakdown! Best video on the subject on CZcams. Thank you.
Thank you for watching! We appreciate your kind words! :)
Still the best and clearest explanation after all these year. Thank you.
Wow, Thank-you so much for this video. I've always been confused about buy-limit stop limit...
This is the bestest explanation I’ve ever seen, so far.
Thank you! We are happy to hear that our video was so helpful!
Wow! Great graphical explanation 👍👍👍I read and watched these order types elsewhere, but this vid finally helped me grasp the definition.
This was the clearest example i’ve seen of market orders thank you very much. The only thing left that i’m having trouble understanding is trailing stops
what determines if you get filled? if you don't, do you just try again?
Finally understood this lesson. Your visual graphic helped me a ton. Thank you
by far the easiest and best explanation on how to buy and sell stocks thay I've seen on the net.
Trading is very profitable if done the right way!
You are right!
Vegard, if course, what kind setup do you use in trading ?
I don’t trade myself due to how busy I am. I trade with the help of a trade expert, Mr Wilson McEntee. He handles all my trades on my behalf generating high profits for a commission.
I have been hearing good stuffs about Mr Wilson, how does his trading service work and how can I communicate to him from here in London. Thanks mate.
James Comm, Mr Wilson is my trade manager. With well over 2 months now I have made millions through him. All I do is track the performance of the trade he handles all the trading process because his strategy in trading is just so profitable and amazing. Mr Wilson is just so professional in this that’s why I let him manage my trades.
Hello, first of all, great video! I am new to investing and am a little confused. Why would you want to place a limit order above the market price? I always thought limit orders were the least that you are willing to pay per share?? Not more than what the market price is. Sorry if this is a dumb question, I'm just confused haha
Thanks a lot. Tried everywhere but this one expalins the best and Clear!
This is the first stop limit video that I grasped. Well done!
Thank you for watching! We are very happy to hear that our video was so helpful!
This helped me so much, thanks man!
Probably the best explanation I’ve found on CZcams
Thanks for the information, I am confused, in your example if I am placing an order to BUY wouldn't it be the lower the better for the price to go down, why would I place a stop. How does stop-limit differ from just limit. Thank you again
Excellent video! Very clear and easy to understand. Thanks
Thank you for watching!
Great explanation and chart. Thanks
Very clear! Thank you! The clearest explanation so far!
Awesome! Thanks! The guitar at the end aint bad either! :)
ugg after countless search this is the so far the best explanation! thank u
Usually you buy around asking price or generally higher than market price because you want to catch the stock on the upside,even if the stock has been going down you want to buy the moment it goes back up as oppose to getting it when its going lower because it could just be nosediving down for a while
The best explanation I have seen thus far stop limit vs stop loss.
Thank you for watching! We are very happy to see that our video was so helpful! If you would like to be informed of our newest videos and other risk articles, sign up for our newsletter here: www.bionicturtle.com/blog/.
I bought gopro shares at 58.00. I out a 90.00 limit on it. Does this mean it will sell at 90.00 or automatically buy at 90.00
Hi David, great video. Please clarify these 2 things for me: 1 - does the STOP in a STOP-LIMIT , always act as JUST the trigger for the limit ? and 2: what happens to the STOP in a STOP-LIMIT if the LIMIT is not reached at all? ex: i buy stock @ 10 thinking it will go to 100. i set a STOP-LIMIT sell order for stop@ 80 and limit @ 100. If the price never reaches 80, nothing happens; if it reaches 99 but then drops, will it be sold as a market order @ 80, or once it reached 80 it became a limit order but since the price never reached the limit , nothing happens, my order is not filled at all ?? To protect my profit in this case, is only a trailing-stop the solution?
Thank you for this awesome easy to understand explanation with the graph. :)
You're welcome! Thank you for watching :)
Very clear!!!! Your chart is so clear ! Thanks alot
Does a limit order need to be fully filled before it is processed? How much time is a limit order given before it is canceled if the order was not fully filled? Also the limit price is set by last stock sold price?
For the stop-limit @ $35 / $37 example, you said that after the price reaches $35, the limit order of $37 is triggered and your order will be filled at a price $37 or better (e.g. 36.90 like you've said in the video). Why wouldn't your order get filled at $35 after the trigger when $35 is better than $37 and $36.90? Would appreciate it if you can clarify this concept for me!
Great question and I wish someone would answer.
best esplenation ive seen . right to the point . loved it !!!
Thank you for watching!
Watched a lot of videos, Best explanation till date. Staright to the point and clear
Does anyone know if the market order has higher priority than triggered stop order(become market order, but previously placed) or not?
I have a question. suppose the normal price of a stock was 10 and it is on a high ride of 30 and climbing up wards ue to positive news and future gains. I hit a Market order to sell 1000 shares , Will i I get a price close to 30 OR Above if the stock is still climbing above 35 or so ? It says you will get the lowest of the market order for that shares. What if some people had put in an order to buy at USD 4 or USD 7 and those orders being the lowest, will i get those 4 or USD 7 prices for the shares I sell on Market order or or prices where the share is currently trading around 30 and above ... Thank you for the support in advance.
Why would you put a limit order to buy at $35 when the current price is at $30? Everything is backwards. You'd want to buy low and sell high....should be switched sides
***** Yes, you are right about that! Some people like to put stops after a confirmed breakout.
It can be used if you're expecting sudden upward volatility from a low position.
sounds correct to me, the limit is 35 to protect against a sudden surge in price beyond 35 when buying the stock at 30.
Sometimes you are waiting for confirmation before purchasing long.
Another reason is if a stock you want to buy is falling in price. But you don't want to try and predict what the stocks final bottom will be. You can put a limit order to buy above the current price. As the price falls you lower your limit order to buy with the stocks falling price. When the stock finally bottoms and starts a new uptrend it will pick up your "above the market" limit order to buy on the way up.
it depends on the general direction prices are moving in.... if prices are rising when you buy then you want to set a limit above the current market price to "limit" the amount you pay - kinda like a ceiling.
If the market is at 30, is there an order type to purchase if price falls below say 25? I.evCould you have a limit which is below current market for a buy transaction?
if it's stop at $25 dollars, does it become a market order when the prices reaches $25 or the bid and ask reaches $25?
u the man bro. i'm still kinda iffy on the whole sell at a stop-limit order or stop order though. so stop at 25 sells around 25? so it could sell at 24.50 and 25.50? right depending on what the market price is at that time?
On the buy side if you put your stop-limit order with the stop @ $35 and limit @ $37.... when the market hits $35 and your limit to buy @ $37 or less goes in.. are you now more likely to get filled at the higher price of $37 while the market currently trades at $35 ?? If you assume the market price hangs around at $35 (but obviously there are still sellers in the level 2 above the current the lowest asking price of $35 that want to sell their shares at higher prices like $37) am I more likely to get paired with these higher priced sellers since my limit order is @ $37 or would I automatically be paired with the current best asking price at the time? I just want to make sure I understand all of the angles. Thanks to anyone who can answer this question
awesome, best crisp way of presentation. one picture and less words of explanation needed.
When would you need to use a Stop order when buying? I do not see the point of that because it sounds like you wait until the price gets to a certain height before the order is made. Wouldn't you always want to buy the stock as low as possible?
thanks for the video very clear and concise. To the point.☮️
Also, can I place a limit sell above the current price? So say the market is at $30, like in your example, and I want to ensure a certain profit (for sake of the example say 10% gain), could i set a market limit for $33? ( I do understand that it can't be "ensured", but this is under the assumption that the price WILL rise)
To explain this desire to set a limit sell above the current price: I'd want to set this limit sell because the stock hasn't been performing particularly well, but I expect that it will, but only 10% greater than the current price of $30.
so limit orders always become market orders ? correct ? If you place a limit order above the price say you are buying will it still limit ?
Hi there, thanks for the video. I wanted to expand on limit orders. Does the limit order always gets filled if the price goes beyond the limit order? So let's say I want to go long at 35$ at market open, stock is trading at 36$, goes down to 34$ within the first minute of market open, with the wide bid spread associated with market open, will my order get filled at 35$ ?
(Goes down to 34$ and back up to 36$ within the first minute) I should add
this is by far the best video explaining those order types
Best explanation I’ve seen on the subject. Love the graphics! So on stop limit, does it mean once he stop triggered, the shares are available at limit price or better and sold right away or we have to wait for the price to drop to limit price to excite? Also, I’m using interactive brokers, why is their default limit price is higher than stop price on a sale order? Thanks
Perfect explanation. This should be included to all new brokerage accounts
very informative. Good breakdown of information with an even better delivery. I also enjoyed the grafics and visual aids. Good Job!!
Beautifully explained. The best I've seen. Thank you.
I'm still confused... How does stop limit work if you want to sell at a price higher than current price? If I buy at 30, current price is 35 I can make a limit sell at 40 and hope it gets there....but can I set an order to sell at 32 if it doesn't quite reach 40 and starts to drop?
is it possible to set something that sells above the price. say i want to lock in profits at 20 price right now is 15 is this possible?
thanks you so much i have watched more than 5 videos i didnt undrstand but your explaination was clear i undrstood now
Your Chart Beats all the other explanations. Direct and Clear! and is there a way to get that full chart in one frame?
Well explained. You did a great job!
This explanation is simply fantastic!!! Thank you.
Glad you like it. Frankly, I'm eager to try an update (this was eight years ago), I think I've received some great feedback for improvements (also, I have more experience as an investor now, so i have a bit more context on the purpose of some of these orders). Thanks again
Just the help I needed! Thanks!
What is the best order type if you want to hide the quantity of stock you want filled?
Think I may have worked it out - if going long, and say the the limit was 37, the price could shoot past it and the order would not be filled. But if a stop triggered it at 35, you would have a chance of getting filled any point between 35 and 37, i.e. far more chance of getting filled. Correct?
Very clear and perfect way you explained this. Graphical [presentation makes things much easier. Thanks
Great explanation HOWEVER: It is assuming one wants to buy above the current price, and sell under the current price. What about the opposite scenario?
Wonderfully simple. Thank you!
Thank you for watching!
I understand everything apart from Stop orders. So market and limit orders are simple. I have missed out on buying trades by fractions of 1% where had I set a stop order I would have got it. I believe I could have set a buy of 5000 say, (I missed out on a trade that dropped to 5001 before going back up!), but to have a higher buy level of 5100 in case the lower level was not reached. Once the price drops below the 5100 level I assume that the 5100 level then becomes active as the fall back buy option and in this example the buy would have executed at 5100!? Also, I need to protect myself from bad investments and set up stop orders to limit losses.
wonderfull, even after 10 years this educational video is absolutely usefull, thank you
This actually helped a lot. Thank you!
I still can't decide which order type is overall the best route to take. Im 100% new to buying and selling stocks.
I use limit order on buying and selling. It is safer, sometimes a stock fluctuating too much for market order
Bravo! Crystal clear explanation ever!
Thank you for watching!
Confusing names for some of these. For example, a stop market sale could be called a trigger market sale instead, since the specified price will trigger a market sale. The term "stop" is confusing because what actually is stopping? Normally stop means for something to cease, not move, discontinue what it was previously doing... so this is not a good use of the word. The only thing we might be "stopping" is retaining that stock but trigger market sale is (in my opinion), a much better term. In fact since we are not really stopping anything, this could be called a conditional start market sale, since we would be initiating a market sale at some set price.
Many others could have been named better too to help alleviate confusion.
This helped a lot for the Series 6. Thanks!
Awesome, glad to hear it. Good luck on the exam!
Bionic Turtle any possibility you can make one for calls puts longs and shorts before Monday :)
I did just start a new FRM series (we're 9 into the series), when we get to T3. Hull, there will be quite a bit on options. But it won't be before Monday, lol, we can barely keep up with our paying customers at BT. Thanks!
how do you sell your stock on td ameritrade by T-Stop % and $? Let's say a penny stock is .18 cents and when the market open, i know that the price will go up to 20 cents by mid day it will go to 24 cents. So let's say i want to sell my stock by 22 cents, how do you set it with T-Stop $ to sell when the price reaches 22 cents?
Best video I've seen to explain this- thank you
Simple and easy to understand, thanks.
Thank you. This is very well illustrated.
OK I think I finally got it. My issue was between limit and stop-limit. Limit's limitation is that the market might not reach or (and more importantly to understand the difference:) can move on super quickly and might not get fulfilled IF the price moved in the wrong direction from THE DESIRED PRICE (simplifying this analogy so it doesn't matter buy or sell side). You had no contingency price in case it moved in the wrong direction. Stop-limit allows you have that contingency price; to build in $35-$37 as a 'buffer', but $35 as the first trigger. The STOP is the signal that your desired price is reached: like a limit order. But you also put in a JUST IN CASE price (almost like a second limit) that is intentionally WORSE than the stop. This is a better guarantee to get it fulfilled than JUST a limit order because if the market moves super quickly in the wrong direction you had a backup worse price.
thank you, that just saved my life wow
Hi thanks for the video, its much clearer than all the other information I have seen. Unfortunately I still don't understand the stop limit. So for the buy example, the price hits $35, which triggors a stop to buy, which is a market order at $35? And at the same time is a limit order to buy, which will buy at a price better than $37? Does that essentially mean then that it will triggor a market order at $35, but wont fill the market order higher than $37? Sorry if that's off the mark.
Hey David thanks for the illustration. This has been the best video yet. Maybe it's starting to click because I've watch so many other videos on the same concept but none of them have shown visually all the type and there uses. The only thing your missing is a trailing stop but it was better not to have added it because this videos fantastically described the basics. Thanks
hi can you please explain further what the stop order is as well as the stop limit. also, who declares the stop order and stop limit.
Great explanation and diagram !!! Thanks!
2:05 so price is 30 and you make a stop order to buy at 35, well thank you for explain that to me that way, now i fully understant it and i'm not confused at all!
One of the best video explaining this subject
Great video.. one question though: when you said the stop becomes a "stop and limit" (@4:24) did you mean "stop and market"?
I was thinking the same thing.......anyone??
Yes it should be stop and market not stop and limit since there is no guarantee on the price. Think of limit as a guaranteed proce
Yeah he must of misspoke.
I still dont't understand the difference between the limit and stop order? It seems they are both the same thing. Say the market price is $30 and we put in a stop order of $37, does that mean that once the stock reaches $37 that we will purchase the stock higher than $37?
I understand that it becomes a market order at once it reaches but does that mean we can possibly purchase at $36.90, $36.92, etc, or will be higher than $37 since it is a stop order??
what does the "stop" part mean... Lets say I bought 1 share of ABC for $100 and I wanna do a Sell-Limit order. If my stop price is $190 and my limit is $200, what actually happens when it "STOPS" what does it stop doing?