6.5.1.5. Memory Tricks for Orders
Sell limit orders and buy stop orders are typically placed over the market price. This can be remembered through the mnemonic
SLOBS: Sell Limit-Over the market-Buy Stop.
Buy limit and sell stop orders are typically placed under the market price. This can be remembered by the mnemonic
BLUSS: Buy Limit-Under the market-Sell Stop.
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SUMMARY TABLE |
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Types of Orders |
Characteristics |
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Market Orders |
• Filled immediately at the best available price • Always filled |
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Limit Orders |
• Filled at a specific price or better • Used when not ready to buy or sell at the market price • Buy limits placed below market price • Sell limits placed above market price • Not always filled |
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Stop Orders (Stop-Loss Orders) |
• Turns into a market order when a trigger price is hit • Buy stops are used to protect short sale gains • Buy stops placed above market price • Sell stops are used to protect long sale gains • Sell stops placed below market price • Always filled if triggered |
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Stop-Limit Orders |
• Turns into a limit order when a trigger price is hit • Two important prices, trigger price and limit price • Buy stops are used to protect short sale gains • Buy stops placed above market price • Sell stops are used to protect long sale gains • Sell stops placed below market price • Protects against the sec |