• Types of orders


    Fixed price order for the same day means that an exchange member is asked to buy or sell a given number of lots (contracts) for a particular month at a set price, for instance, two lots of coffee for December at US$ 0.62/lb. The contract must be completed during the day on which the order is given. If possible, the broker will buy (sell) at a lower (higher) price but never at a higher (lower) price. This ensures that the client will get the desired price if a contract is made, but they run the risk of not having a contract made at all if the floor trader cannot execute the order on that day.

    Fixed price, open order is a similar order, except that the instructions stand for an indefinite period of time until the order is satisfied or cancelled by the client. This type of order is popularly known as 'good till cancelled' (GTC).

    Market order is an order that gives the broker more flexibility, and allows him to make a contract for the best possible price available at the time.

    Different orders are often made, subject to certain conditions. For example, a broker may be instructed to make a contract if the price reaches a certain level. Orders that are conditional on specific terms set by the client can also be made. Examples of such orders are: those to be carried out only at the opening or closing of the market; or those to be carried out within a certain period of time. (Orders have to queue at the opening and closing of the market and are therefore not all filled at the same price, particularly when trading volume is high in an active market. If one stipulates a price then an order may not be executed if that price is not touched, or is exceeded.)

    Market orders and fixed price orders for the same day are the most common but orders are also made to suit the requirements of clients. Clients who follow exchange movements closely frequently revise their orders in response to changing market conditions. Those less involved in hourly market movements usually place open orders, or orders subject to certain conditions. For example, a stop-loss order - which is triggered into action as soon as a predetermined price level is reached - limits the client's losses relative to the level at which the order is executed. Placing more general conditions on the order gives the broker greater flexibility to react to changes in the market and leaves the final decision to them.

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