You decide what type of order you want to make. Let’s say you’re trading Vodafone shares. These are the different types of orders you can place:
Open Trade – you get the price at which Vodafone is trading when you place the order. Let’s use the example that Vodafone is currently offered on your spread trading platform with a spread of 121 – 124 (the Sell/Buy price). If you place your order right then, you can buy let’s say £10 a point at 124 if you think the price will go up, or sell £10 a point at 121 if you think the price will fall.
Market Order – you place a market order to enter a trade at a certain price. So let’s say for example you wanted to buy Vodafone at 110 you would place a market order so that if/when Vodafone hits 110 your order will be executed and the trade opened.
You can place a Market Order that -:
a) stays open and good until it hits 110 or you decide to cancel the order or
b) is only open for that day and then its cancelled if Vodafone does not hit 110 or
c) you can put a date until when you want the order to remain open and then it is cancelled if the order hasn’t been executed (i.e. Vodafone hasn’t reached 110).
Market orders can be made during market hours or after market hours in the evening. Market Orders are also sometimes referred to as Limit Orders.
Market on Open (MOO) – the trade is made at the price of Vodafone at the opening of the FTSE trading day.
Market on Close (MOC) – the trade is made at the end of the trading day, at the price it closes at.
A Good Till Cancelled (GTC) is like a limit order, except it can stay open for a long time, like 30 or 90 days, letting you place your limit at a price much higher or lower than the current price because with a GTC the trade will stay open for a long period of time. Let’s say you want to sell Vodafone when it hits £210, which is a great deal higher than the current price of £124. Your order stays open and good until it hits £210 or you decide to cancel the trade.
Good For the Day (GFD). If Vodafone doesn’t hit the price you want to buy or sell it at during the trading day, the trade is cancelled at the end of trading that day.
Stop loss order – as its name implies, you use stop‐loss orders to make sure you don’t lose too much if you’re trade is going against you. But remember, you don’t want to set the stop price to close or else you’ll have little chance for it to quickly spring up back into a profit for you. (You’ll learn more about stop‐loss orders in another chapter).
Buy and Sell stops – This is basically the opposite of stop‐loss order. It lets you buy or sell based on the momentum of what you want to trade. You buy if its price has climbed to a certain price or sell when it goes down to a certain price. If you think it’s best to buy when the price is going up, you can place buy stop order at 131. Conversely, you can make a sell stop at let’s say 117.
Online trading platforms will have a section where you can see all your confirmed open trades in one easy view for you to keep track of them.
Most trading companies will have a page where you can practice making ‘virtual’ or ‘dummy’ trades i.e. you are not actually placing any real funds. This is an important tool to make sure you get the hang of it before actually placing money on any real trades.
