Less Common Orders and Summary

Less Common Orders

These are not often used, but you may come across them, and even find them useful on occasion.

The Market on Close (MOC) order tells the dealer on the trading floor to buy or sell for you in the last minute of trading. As prices can get distorted, and this is a market order with no limits, this isn’t used much.

The Market Not Held, sometimes called the Disregard Tape Order (DRT), is a market order but it instructs the floor broker to use their best judgment in filling the order, and not be constrained by any time limit. It basically puts the responsibility with the broker to find the best price, but you cannot hold him liable if he gives you a bad fill which costs more than a simple market order.

The Fill or Kill (FOK) order is entered with a specific price, and tells the broker to either fill immediately at that price, or cancel (kill) the order. In practice, the floor broker will usually try three times in succession to fill the order before killing it.

The One Cancels Other (OCO) order is actually two orders, the second one of which happens if the first can’t take place. Perhaps you’re day trading, and definitely want to close out your position at the end of the day, but would like to sell for a certain price if it is reached. You can place a sell limit order OCO MOC. If your price limit is reached, your position is closed and the MOC order is canceled; if the price never gets there, the MOC order stands and your position is closed at whatever price prevails in the last minute of trading, with the limit order being automatically canceled.

Summary

  • your main aim in trading is to preserve your capital
  • position sizing is essential in achieving this task
  • don’t trade more than 10% of your account in one position
  • don’t trade more than 25% of your account in one market sector
  • don’t risk the loss of more than 2% of your account on any one trade
  • in a losing position, avoid risk and cut your losses quickly
  • in a winning position, seek risk and let your winners run
  • learn to control your emotions and trade consistently in accordance with your plan

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