what is an order 
an order consists of instructions to a broker or brokerage firm to purchase or sell a security on an investor s behalf an order is the fundamental trading unit of a securities market orders are typically placed over the phone or online through a trading platform although orders may increasingly be placed through automated trading systems and algorithms when an order is placed it follows a process of order execution orders broadly fall into different categories this allows investors to place restrictions on their orders affecting the price and time at which the order can be executed these conditional order instructions can dictate factors such as a particular price level limit at which the order must be executed for how long the order can remain in force or whether an order is triggered or canceled based on another order understanding ordersinvestors utilize a broker to buy or sell an asset using an order type of their choosing when an investor has decided to buy or sell an asset they initiate an order the order provides the broker with instructions on how to proceed orders are used to buy and sell stocks currencies futures commodities options bonds and other assets generally exchanges trade securities through a bid ask process this means that to sell there must be a buyer willing to pay the selling price to buy there must be a seller willing to sell at the buyer s price unless a buyer and seller come together at the same price no transaction occurs the bid is the highest advertised price someone will pay for an asset and the ask is the lowest advertised price at which someone is willing to sell an asset the bid and ask are constantly changing as each bid and offer represents an order as orders are filled these levels will change for example if there is a bid at 25 25 and another at 25 26 when all the orders at 25 26 have been filled the next highest bid is 25 25 this bid ask process is important to keep in mind when placing an order because the type of order selected will impact the price at which the trade is filled when it will be filled or whether it will be filled at all order typeson most markets orders are accepted from both individual and institutional investors most individuals trade through broker dealers which require them to place one of many order types when making a trade markets facilitate different order types that provide for some investing discretion when planning a trade order types can greatly affect the results of a trade when trying to buy for example placing a buy limit at a lower price than what the asset is currently trading at may give the trader a better price if the asset drops in value compared to buying now but putting it too low may mean the price never reaches the limit order and the trader may miss out if the price moves higher a market order instructs the brokerage to complete the order at the best available price 1 market orders are generally always executed unless there is no trading liquidity a limit order is an order to buy or sell a stock at a specific price or better limit orders ensure that a buyer pays only a specific price to purchase a security limit orders can remain in effect until they are executed expire or are canceled 2a limit sell order instructs the broker to sell the asset at a price that is above the current price for long positions this order type is used to take profits when the price has moved higher after buying a stop order instructs the brokerage to sell if an asset reaches a specified price below the current price a stop order can be a market order meaning it takes any price when triggered or it can be a stop limit order wherein it can only execute within a certain price range limit after being triggered 3a buy stop order instructs the broker to buy an asset when it reaches a specified price above the current price 3a day order specifies the timeframe of the order rather than the type of order a day order must be executed during the same trading day that the order is placed a good til canceled gtc order also indicates the timeframe in which the trade must be executed this type of order remains in effect until it is filled or canceled if an order is not a day order or a good til canceled order the trader typically sets an expiry for the order 