Technology has eased the trading process in recent years. Millions of people now have access to financial assets traded, unlike in the past.
At the same time, the majority of trading strategies have become automated. For instance, the process of opening trades has been illuminated.
We'll look at a few terminologies of the stock market, which are a type of trade execution.
Stock Market Terminologies
1). Market Order
2). Limit Order
3). Pending Order
4). Executed Order
5). Open Position
6). Square Off
1). Market Order
A market order is a type of order to buy and sell a security at ongoing marking prices. Once the order is placed, it is executed quickly. The most important key feature of a market order is that it gives you a complete guarantee for the execution of the order. On the other hand, the executed order’s price cannot be assured.
For example, suppose that the ongoing market price of stock X is Rs 120.
Now, you place a market order to purchase the stock at the same price and if your order is executed quickly. However, keep in mind that the executed order price cannot be assured at the same price you purchased.
This happens because the market is uncertain, stock prices can fluctuate at every second. Even the last-traded price in the market has already fluctuated when you bid on your order. Therefore, you will get a price that is close to your bid price, the stock that you have purchased is traded in a good manner and hence, which is also known as the “liquid” stock.
2). Limit Order
A limit order enables you to buy or sell securities at a specific price. A buy limit order indicates that you are willing to purchase a security at a particular price or below. A sell limit order specifies that you want to sell the security at or over the limit price. Unlike Market Orders, however, there is no certainty that this transaction will be executed.
A good example will help you understand this in a better way.
When you place a buy limit order for a stock at Rs 50, you are indicating that you are willing to purchase the stock at that price or less. A sell limit order for a stock at Rs 50 indicates that you want to sell the stock at or above Rs 50.
The amazing benefit is that you won't have to track the stock trend every second to get the best pricing. To some extent, the limit order automates your trade. Orders can be placed for a day, a few weeks, or even a month or more.
3). Pending Order
When specific preconditions set by the trader are met, a pending order instructs the trader to purchase or sell an instrument. When a trader places a pending order, they are essentially telling their broker that they do not want their order to be executed at the current market price, but rather only if the market price hits a particular threshold. Limit orders and stop orders are the two types of pending orders.
Let’s understand deeply with the help of an example
Suppose that a company's stock is now trading at Rs 10. Despite the fact that you are long the stock, you anticipate it will fall below Rs 8 before rising. As a result, rather than placing a market order at Rs 10, you can place an order that would execute a purchase trade when the price falls to Rs 8.
As a result, there's no need for you to wait for the deal to be completed.
You can also place a pending order if you feel the stock will rise to Rs 12 before falling to Rs 5
4). Executed Order
When a pending order is matched and trade occurs, the status of the order is changed to Executed. The order stays pending as long as it is not traded at all, but as soon as it is partially exchanged, it becomes an executed order. A pending order can be partially or fully executed. In either situation, the order's status changes to the executed order.
Let’s discuss the example that helps in understanding.
Suppose if A places an order to purchase 100 shares of Reliance at Rs 1015. If there is any seller available that wants to sell the shares at Rs 1015 with the same quantity that A wants then the order will be executed completely in one go.
In case, there are 3 sellers available at the same price but this time quantities are for 50, 30, and 20 each, then the order will be executed in three different parts to fulfil a 100-quantity order.
5). Open Position
An open position is a trade that has the potential to make a profit or lose money. All profits and losses are realised when a position is closed, and the transaction is no longer active. Open positions can be long or short, allowing you to profit from both rising and falling markets.
Let’s discuss an example of the open position
Let's say you want to buy shares in business X and decide to do so through a CFD trade. You would enter the market after deciding the parameters of your trade and conducting the necessary technical and fundamental survey. Your position would be termed ‘open' at this time.
In order to cancel an open position, you must normally reverse the trade that was used to open it (selling any assets that have been bought, or vice versa). If an open position reaches its expiration date, it may be automatically closed. This may happen with a futures contract.
If there was any stop or a limit attached which was filled afterward the expiration date, then again it will automatically close.
6). Square off
Squaring off is a day-trading strategy in which a trader buys or sells a specific quantity of an asset (usually stocks) and then reverses the transaction later in the day in the hopes of profiting (price difference net of broker charges and tax).
Let’s have an example to understand this.
Suppose, Person A purchases 100 Reliance shares through a broker on the BSE Sensex for Rs 10 per share. Person A sells all of the shares later in the day for Rs 12 per share, plus Rs 10 in broker fees. A makes Rs (200-10)=Rs 190 in net profit.
Concluded:
These terminologies are widely used in the stock market. Those who are budding traders must know the exact meaning of these terminologies so they can use their knowledge in the right direction to achieve their planned goals.
Technology has eased the trading process in recent years. Millions of people now have access to financial assets traded, unlike in the past.
At the same time, the majority of trading strategies have become automated. For instance, the process of opening trades has been illuminated.
We'll look at a few terminologies of the stock market, which are a type of trade execution.
Stock Market Terminologies
Market Order
Limit Order
Pending Order
Executed Order
Open Position
Square Off
Market Order
A market order is a type of order to buy and sell a security at ongoing marking prices. Once the order is placed, it is executed quickly. The most important key feature of a market order is that it gives you a complete guarantee for the execution of the order. On the other hand, the executed order’s price cannot be assured.
For example, suppose that the ongoing market price of stock X is Rs 120.
Now, you place a market order to purchase the stock at the same price and if your order is executed quickly. However, keep in mind that the executed order price cannot be assured at the same price you purchased.
This happens because the market is uncertain, stock prices can fluctuate at every second. Even the last-traded price in the market has already fluctuated when you bid on your order. Therefore, you will get a price that is close to your bid price, the stock that you have purchased is traded in a good manner and hence, which is also known as the “liquid” stock.
Limit Order
A limit order enables you to buy or sell securities at a specific price. A buy limit order indicates that you are willing to purchase a security at a particular price or below. A sell limit order specifies that you want to sell the security at or over the limit price. Unlike Market Orders, however, there is no certainty that this transaction will be executed.
A good example will help you understand this in a better way.
When you place a buy limit order for a stock at Rs 50, you are indicating that you are willing to purchase the stock at that price or less. A sell limit order for a stock at Rs 50 indicates that you want to sell the stock at or above Rs 50.
The amazing benefit is that you won't have to track the stock trend every second to get the best pricing. To some extent, the limit order automates your trade. Orders can be placed for a day, a few weeks, or even a month or more.
Pending Order
When specific preconditions set by the trader are met, a pending order instructs the trader to purchase or sell an instrument. When a trader places a pending order, they are essentially telling their broker that they do not want their order to be executed at the current market price, but rather only if the market price hits a particular threshold. Limit orders and stop orders are the two types of pending orders.
Let’s understand deeply with the help of an example
Suppose that a company's stock is now trading at Rs 10. Despite the fact that you are long the stock, you anticipate it will fall below Rs 8 before rising. As a result, rather than placing a market order at Rs 10, you can place an order that would execute a purchase trade when the price falls to Rs 8.
As a result, there's no need for you to wait for the deal to be completed.
You can also place a pending order if you feel the stock will rise to Rs 12 before falling to Rs 5
Executed Order
When a pending order is matched and trade occurs, the status of the order is changed to Executed. The order stays pending as long as it is not traded at all, but as soon as it is partially exchanged, it becomes an executed order. A pending order can be partially or fully executed. In either situation, the order's status changes to the executed order.
Let’s discuss the example that helps in understanding.
Suppose if A places an order to purchase 100 shares of Reliance at Rs 1015. If there is any seller available that wants to sell the shares at Rs 1015 with the same quantity that A wants then the order will be executed completely in one go.
In case, there are 3 sellers available at the same price but this time quantities are for 50, 30, and 20 each, then the order will be executed in three different parts to fulfil a 100-quantity order.
Open Position
An open position is a trade that has the potential to make a profit or lose money. All profits and losses are realised when a position is closed, and the transaction is no longer active. Open positions can be long or short, allowing you to profit from both rising and falling markets.
Let’s discuss an example of the open position
Let's say you want to buy shares in business X and decide to do so through a CFD trade. You would enter the market after deciding the parameters of your trade and conducting the necessary technical and fundamental survey. Your position would be termed ‘open' at this time.
In order to cancel an open position, you must normally reverse the trade that was used to open it (selling any assets that have been bought, or vice versa). If an open position reaches its expiration date, it may be automatically closed. This may happen with a futures contract.
If there was any stop or a limit attached which was filled afterward the expiration date, then again it will automatically close.
Square off
Squaring off is a day-trading strategy in which a trader buys or sells a specific quantity of an asset (usually stocks) and then reverses the transaction later in the day in the hopes of profiting (price difference net of broker charges and tax).
Let’s have an example to understand this.
Suppose, Person A purchases 100 Reliance shares through a broker on the BSE Sensex for Rs 10 per share. Person A sells all of the shares later in the day for Rs 12 per share, plus Rs 10 in broker fees. A makes Rs (200-10)=Rs 190 in net profit.
Concluded:
These terminologies are widely used in the stock market. Those who are budding traders must know the exact meaning of these terminologies so they can use their knowledge in the right direction to achieve their planned goals.
Techdirt has not posted any stories submitted by stockdaddy.
Basic terminology of the stock market (Part 2)
Technology has eased the trading process in recent years. Millions of people now have access to financial assets traded, unlike in the past.
At the same time, the majority of trading strategies have become automated. For instance, the process of opening trades has been illuminated.
We'll look at a few terminologies of the stock market, which are a type of trade execution.
Stock Market Terminologies
1). Market Order
2). Limit Order
3). Pending Order
4). Executed Order
5). Open Position
6). Square Off
1). Market Order
A market order is a type of order to buy and sell a security at ongoing marking prices. Once the order is placed, it is executed quickly. The most important key feature of a market order is that it gives you a complete guarantee for the execution of the order. On the other hand, the executed order’s price cannot be assured.
For example, suppose that the ongoing market price of stock X is Rs 120.
Now, you place a market order to purchase the stock at the same price and if your order is executed quickly. However, keep in mind that the executed order price cannot be assured at the same price you purchased.
This happens because the market is uncertain, stock prices can fluctuate at every second. Even the last-traded price in the market has already fluctuated when you bid on your order. Therefore, you will get a price that is close to your bid price, the stock that you have purchased is traded in a good manner and hence, which is also known as the “liquid” stock.
2). Limit Order
A limit order enables you to buy or sell securities at a specific price. A buy limit order indicates that you are willing to purchase a security at a particular price or below. A sell limit order specifies that you want to sell the security at or over the limit price. Unlike Market Orders, however, there is no certainty that this transaction will be executed.
A good example will help you understand this in a better way.
When you place a buy limit order for a stock at Rs 50, you are indicating that you are willing to purchase the stock at that price or less. A sell limit order for a stock at Rs 50 indicates that you want to sell the stock at or above Rs 50.
The amazing benefit is that you won't have to track the stock trend every second to get the best pricing. To some extent, the limit order automates your trade. Orders can be placed for a day, a few weeks, or even a month or more.
3). Pending Order
When specific preconditions set by the trader are met, a pending order instructs the trader to purchase or sell an instrument. When a trader places a pending order, they are essentially telling their broker that they do not want their order to be executed at the current market price, but rather only if the market price hits a particular threshold. Limit orders and stop orders are the two types of pending orders.
Let’s understand deeply with the help of an example
Suppose that a company's stock is now trading at Rs 10. Despite the fact that you are long the stock, you anticipate it will fall below Rs 8 before rising. As a result, rather than placing a market order at Rs 10, you can place an order that would execute a purchase trade when the price falls to Rs 8.
As a result, there's no need for you to wait for the deal to be completed.
You can also place a pending order if you feel the stock will rise to Rs 12 before falling to Rs 5
4). Executed Order
When a pending order is matched and trade occurs, the status of the order is changed to Executed. The order stays pending as long as it is not traded at all, but as soon as it is partially exchanged, it becomes an executed order. A pending order can be partially or fully executed. In either situation, the order's status changes to the executed order.
Let’s discuss the example that helps in understanding.
Suppose if A places an order to purchase 100 shares of Reliance at Rs 1015. If there is any seller available that wants to sell the shares at Rs 1015 with the same quantity that A wants then the order will be executed completely in one go.
In case, there are 3 sellers available at the same price but this time quantities are for 50, 30, and 20 each, then the order will be executed in three different parts to fulfil a 100-quantity order.
5). Open Position
An open position is a trade that has the potential to make a profit or lose money. All profits and losses are realised when a position is closed, and the transaction is no longer active. Open positions can be long or short, allowing you to profit from both rising and falling markets.
Let’s discuss an example of the open position
Let's say you want to buy shares in business X and decide to do so through a CFD trade. You would enter the market after deciding the parameters of your trade and conducting the necessary technical and fundamental survey. Your position would be termed ‘open' at this time.
In order to cancel an open position, you must normally reverse the trade that was used to open it (selling any assets that have been bought, or vice versa). If an open position reaches its expiration date, it may be automatically closed. This may happen with a futures contract.
If there was any stop or a limit attached which was filled afterward the expiration date, then again it will automatically close.
6). Square off
Squaring off is a day-trading strategy in which a trader buys or sells a specific quantity of an asset (usually stocks) and then reverses the transaction later in the day in the hopes of profiting (price difference net of broker charges and tax).
Let’s have an example to understand this.
Suppose, Person A purchases 100 Reliance shares through a broker on the BSE Sensex for Rs 10 per share. Person A sells all of the shares later in the day for Rs 12 per share, plus Rs 10 in broker fees. A makes Rs (200-10)=Rs 190 in net profit.
Concluded:
These terminologies are widely used in the stock market. Those who are budding traders must know the exact meaning of these terminologies so they can use their knowledge in the right direction to achieve their planned goals.
Basic terminology of the stock market (Part 2)
Technology has eased the trading process in recent years. Millions of people now have access to financial assets traded, unlike in the past.
At the same time, the majority of trading strategies have become automated. For instance, the process of opening trades has been illuminated.
We'll look at a few terminologies of the stock market, which are a type of trade execution.
Stock Market Terminologies
Market Order
Limit Order
Pending Order
Executed Order
Open Position
Square Off
Market Order
A market order is a type of order to buy and sell a security at ongoing marking prices. Once the order is placed, it is executed quickly. The most important key feature of a market order is that it gives you a complete guarantee for the execution of the order. On the other hand, the executed order’s price cannot be assured.
For example, suppose that the ongoing market price of stock X is Rs 120.
Now, you place a market order to purchase the stock at the same price and if your order is executed quickly. However, keep in mind that the executed order price cannot be assured at the same price you purchased.
This happens because the market is uncertain, stock prices can fluctuate at every second. Even the last-traded price in the market has already fluctuated when you bid on your order. Therefore, you will get a price that is close to your bid price, the stock that you have purchased is traded in a good manner and hence, which is also known as the “liquid” stock.
Limit Order
A limit order enables you to buy or sell securities at a specific price. A buy limit order indicates that you are willing to purchase a security at a particular price or below. A sell limit order specifies that you want to sell the security at or over the limit price. Unlike Market Orders, however, there is no certainty that this transaction will be executed.
A good example will help you understand this in a better way.
When you place a buy limit order for a stock at Rs 50, you are indicating that you are willing to purchase the stock at that price or less. A sell limit order for a stock at Rs 50 indicates that you want to sell the stock at or above Rs 50.
The amazing benefit is that you won't have to track the stock trend every second to get the best pricing. To some extent, the limit order automates your trade. Orders can be placed for a day, a few weeks, or even a month or more.
Pending Order
When specific preconditions set by the trader are met, a pending order instructs the trader to purchase or sell an instrument. When a trader places a pending order, they are essentially telling their broker that they do not want their order to be executed at the current market price, but rather only if the market price hits a particular threshold. Limit orders and stop orders are the two types of pending orders.
Let’s understand deeply with the help of an example
Suppose that a company's stock is now trading at Rs 10. Despite the fact that you are long the stock, you anticipate it will fall below Rs 8 before rising. As a result, rather than placing a market order at Rs 10, you can place an order that would execute a purchase trade when the price falls to Rs 8.
As a result, there's no need for you to wait for the deal to be completed.
You can also place a pending order if you feel the stock will rise to Rs 12 before falling to Rs 5
Executed Order
When a pending order is matched and trade occurs, the status of the order is changed to Executed. The order stays pending as long as it is not traded at all, but as soon as it is partially exchanged, it becomes an executed order. A pending order can be partially or fully executed. In either situation, the order's status changes to the executed order.
Let’s discuss the example that helps in understanding.
Suppose if A places an order to purchase 100 shares of Reliance at Rs 1015. If there is any seller available that wants to sell the shares at Rs 1015 with the same quantity that A wants then the order will be executed completely in one go.
In case, there are 3 sellers available at the same price but this time quantities are for 50, 30, and 20 each, then the order will be executed in three different parts to fulfil a 100-quantity order.
Open Position
An open position is a trade that has the potential to make a profit or lose money. All profits and losses are realised when a position is closed, and the transaction is no longer active. Open positions can be long or short, allowing you to profit from both rising and falling markets.
Let’s discuss an example of the open position
Let's say you want to buy shares in business X and decide to do so through a CFD trade. You would enter the market after deciding the parameters of your trade and conducting the necessary technical and fundamental survey. Your position would be termed ‘open' at this time.
In order to cancel an open position, you must normally reverse the trade that was used to open it (selling any assets that have been bought, or vice versa). If an open position reaches its expiration date, it may be automatically closed. This may happen with a futures contract.
If there was any stop or a limit attached which was filled afterward the expiration date, then again it will automatically close.
Square off
Squaring off is a day-trading strategy in which a trader buys or sells a specific quantity of an asset (usually stocks) and then reverses the transaction later in the day in the hopes of profiting (price difference net of broker charges and tax).
Let’s have an example to understand this.
Suppose, Person A purchases 100 Reliance shares through a broker on the BSE Sensex for Rs 10 per share. Person A sells all of the shares later in the day for Rs 12 per share, plus Rs 10 in broker fees. A makes Rs (200-10)=Rs 190 in net profit.
Concluded:
These terminologies are widely used in the stock market. Those who are budding traders must know the exact meaning of these terminologies so they can use their knowledge in the right direction to achieve their planned goals.
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