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Order Types

The trading terminal currently supports three types of trading orders

Market Order​

A Market Order is a common type of order in financial market trading.

  • Definition A market order is an instruction from an investor to a broker to buy or sell securities, foreign exchange, or other financial assets at the best available price in the market. Simply put, when an investor places a market order to buy, the broker will execute at the lowest seller's asking price; when placing a market order to sell, the broker will execute at the highest buyer's bid price.

  • Quick Execution Its biggest advantage is ensuring quick trade execution. For example, if an investor urgently wants to buy or sell a trading instrument, using a market order can make the trade execute almost instantly. This is because the broker doesn't need to wait for a specific price to appear but can trade directly at the current market's best price.

  • Price Uncertainty However, a significant drawback of market orders is the uncertainty of the execution price. Since market prices are constantly fluctuating, especially during high volatility or low liquidity conditions, investors may not be able to accurately predict the final execution price. For instance, in forex trading, when major economic data is released and market prices fluctuate dramatically, using a market order to sell a currency pair might result in an execution price much lower than the investor expected.

Limit Order​

A Limit Order is an important type of order in financial trading.

  • Definition A limit order is an instruction from an investor specifying a particular price at which they want the broker to execute a buy or sell order for financial assets. Specifically, for a buy limit order, the investor sets a maximum purchase price, and the trade will only be executed when the market price is equal to or below this set price; for a sell limit order, the investor sets a minimum selling price, and the trade will only be executed when the market price is equal to or above this set price.

  • Precise Price Control The main advantage of limit orders is that investors can precisely control the trade price. For example, in stock trading, an investor might be bullish on a particular stock but consider its current price too high. After analysis, the investor believes that a price of $10 would be an ideal entry point, so they place a buy limit order at $10. This ensures the purchase price won't exceed their expected level, helping to achieve cost control and precise execution of investment strategies.

  • Execution Uncertainty However, limit orders face the issue of execution uncertainty. Since market prices are dynamic, if the set limit price doesn't align with market price movements, the order may not be executed. For instance, if an investor sets a sell limit order well above the current market price, and the market price doesn't rise to that level, the trade won't be executed. In rapidly changing market conditions, such as sudden industry news pushing stock prices up significantly, if an investor's buy limit order price is set too low, they might miss the buying opportunity.

Stop Market Order​

A Stop Market Order is an important type of order in financial trading.

  • Definition It is a pre-set trading instruction that investors use to avoid excessive losses in financial trading. It is widely used in securities, futures, foreign exchange, and other financial markets. When the market price reaches or crosses the investor's pre-set stop price, the stop order is activated and converted into a market order, executing at the best available price in the market to limit losses.

  • Powerful Risk Control Function It is an effective risk management tool. For example, if an investor buys a stock at $50 and considers their maximum acceptable loss to be $10 per share, they set a stop order at $40. If the stock price falls to $40, the stop order will be triggered, and the stock will be sold. This way, the investor keeps their loss within a certain range, avoiding potentially larger losses from further price declines.

  • High Flexibility Investors can flexibly set stop prices based on their risk tolerance, trading strategy, and market expectations. For instance, in the futures market, for highly volatile commodity futures like crude oil, investors can set stop prices relatively loose or tight based on recent price volatility and their financial situation. If an investor is cautious about the market, they might set the stop price closer to the entry price; if they are confident about the market trend and can tolerate larger price fluctuations, they can set the stop price further from the entry price.

  • Passive Trigger Characteristic: Stop orders only become effective when the market price touches or breaks through the set stop price. Before triggering, they don't generate any trading instructions in the market. For example, when an investor sets a stop order for a forex trade, before the market price reaches the stop price, the order remains in a waiting state, and the investor's funds and position status won't change because of this stop order.

  • Suitable for Trend Trading Strategy: In trend trading, investors make buy and sell decisions based on market trends. When an investor determines the market is in an uptrend and buys an asset, they set a stop order to prevent sudden trend reversals. For example, in the gold futures market, if an investor determines that gold prices are in an upward channel and buys gold futures contracts, they might set a stop order at a certain distance below the entry price to prevent sudden price drops. If the price rises as expected, the stop order won't be triggered; but if the price reverses and falls to the stop price, the stop order will trigger in time to prevent the investor from suffering severe losses.