Order types: Market vs. Limit

1Market (buy/sell right away)

You accept whatever the market price is at that moment. Your order is sure to fill, but you don't know the exact price in advance.

In the contest: a Market order fills at the open of the next trading day after you place it.

2Limit (you set the price)

A buy Limit at 100 = buy at 100 or cheaper · a sell Limit at 120 = sell at 120 or higher. If the price never gets there, nothing happens.

In the contest: a Limit order waits up to 5 trading days. If the day's low touches your buy price, you get your price (or the open, if it opened below your price).

3At close (CLOSE)

In the contest: a CLOSE order fills at the day's closing price. Place it before the US market closes (4:00 p.m. New York time) to get that day's close; place it after that and you get the next trading day's close.

4Ladder (BUY_LADDER)

Split your money into several tranches and set buy Limits at several prices, e.g. 3 tranches at stepped-down prices. Whichever levels the price falls to get filled. This way you don't have to guess the exact bottom.

In the contest: each tranche waits up to 5 trading days, and if your stop-loss is hit, any tranches that haven't filled yet are cancelled for you.

5Fees

Every trade has a cost. In the contest, each trade is charged 0.10% of its value. Trade too often and fees will eat into your profits.

🎯 Quiz 2 of 3 right: +50 XP · all correct: +20