Market Orders

• A market order is the simplest order, its purpose is to get the stock order placed as quickly and easily as possible. When you buy "at market," you are agreeing to take whatever the current "ask price" is, even if it has changed since you placed your order.
  
  

How Basic Orders Function

• A market order just requires the symbol, the number of shares and whether you want to buy or sell. Your broker then buys the shares for you at the "ask" current price. Stocks have a "bid price" (the price at which someone is willing to buy your stocks) and a higher "ask price" (the price at which someone is willing to sell shares). Prices can increase between the time you enter your order and when they are filled. So you may want to "limit" the price you are willing to pay.
  
  

Order Price Modifiers

• Once you have entered a basic market order you can add modifiers to it. For instance, a "limit order" adds the maximum price you are willing to pay, or the minimum you will sell for.
  
  A "stop order" or "stop loss," says if the price of my shares fall to this price, sell no matter what (it becomes a market order). A "stop-limit order" says that once your stop price is hit the order becomes a limit order, so you can set the price you are willing to accept.
  
  

Order Time Modifiers

• You can also modify how long an order will stay open. A day order says that if your limit order is not filled by the end of the day it should expire and nothing will be done. A Good-Til-Canceled order, called a GTC, is a condition added to a limit order that allows it to stay on the books until it finally gets filled.
  
  

Market Considerations

• In planning your orders you need to consider what might happen in a rapidly falling market. In this case a "Stop-Limit Order" might never be filled because no one was willing to pay the limit price you set because prices fell right through that price level.
  
  Conversely, in a strongly bullish environment the market can "gap up," meaning that it opens much higher than the price it closed at. So when buying you may want to enter a "Limit Order" to prevent overpaying.
  
  In a normally rising market you might want to sell your shares if they increase by $10 per share. You can set a limit above your purchase price and use a GTC order to wait for that price. Some brokers require that you renew the order periodically. So a GTC order might actually only last for three or six months.