Order

What Is an Order?

An order is a request to a broker to buy or sell a security on an investor's behalf. Every trade starts with an order, whether it is placed through an online trading platform, a mobile app, or a phone call to a financial professional. A typical order identifies the security, the direction of the trade (buy or sell), the number of shares or units, and any instructions about price or timing.

Common Order Types

• Market order: buys or sells immediately at the best price currently available. It usually fills quickly, but the final price can differ from the last quoted price, particularly when prices are moving fast.
• Limit order: buys or sells only at a specified price or better. It gives the investor control over price, but the order may never fill if the market does not reach that level.
• Stop order: becomes a market order once the price reaches a chosen trigger level. Investors sometimes use a stop-loss order to define a level at which a position would be sold.
• Stop-limit order: becomes a limit order once the trigger price is reached, combining a trigger with price control.

How Orders Are Handled

After an order is submitted, it is routed to an exchange, a market maker, or another venue for execution. An order may be filled in full, filled in part, or left open until it is canceled or expires. Investors can often choose a time in force setting, such as a day order that expires at the end of the trading session, or an order that remains active until canceled. Before an order executes, the investor can usually cancel or modify it, although a completed trade cannot be undone through cancellation.

The price received may also be affected by the bid-ask spread and by slippage, which is the difference between the expected price and the price at which the trade actually executes.

Why Orders Matter to Investors

The type of order chosen affects how much control an investor has over price, how likely the order is to execute, and how quickly. Market orders prioritize speed, while limit orders prioritize price. Reviewing an order before submitting it, including its type, quantity, and time-in-force setting, helps avoid unintended trades. Order confirmations and account statements show how each order was filled, which is useful for reviewing past activity.