A securities order is an order to buy or sell a specific quantity of shares in a corporation or a similar financial instrument.
Equities (shares in a company) and annuities (fixed-income securities such as government bonds) were formerly considered as securities. Meanwhile, the diversity has transformed the products (eg options and futures). Therefore, the term is often used in respect of financial instruments.
The order essentially stipulates the direction of the transaction (buy or sell), the nature of securities (stocks, bonds), the ISIN code or symbol, the amount offered or requested and possibly a deadline and a price limit to execute the order.
There are different types of trading orders that meet the different needs of investors. The order itself indicates a purchase price or sale price and will only be executed if there is a corresponding equivalent. It may be partially executed if there is not enough relevant securities in the order book.
An order can have different design types which include market order (best price order) – the order is for each job executed on the exchange at the time of order input. Limit order – the order is for a specified price.
In most markets if the target price is not reached within a maximum of 90 days, during the term of the order, the order is deleted. In general, a shorter duration of the order is given.
If a market error occurs in an order line, it is called a mistrade. Priority market orders are listed according to their seniority, the oldest is addressed first, and each type has a different agenda on the fluctuating stock prices.
If all participants spend their limit orders, all orders are recorded in the order books, but none would be executed. A limit higher than the purchase rate or lower than the selling rate, corresponds to an order placed ‘at market’. This order offers a very good stability, it is the order that must be used primarily to sell, so it does not drop the stock price, while taking the capital gains. In a bear market this order may not be executed.
Some intermediate brokers (particularly online brokers) can place orders combining several simple commands that run on a given scenario. These orders are called complex orders, orders or intelligent multiple orders. The stop is an order triggering a sale which adjusts daily based on the previous day’s closing price.
If the current approaches the threshold, the order is sent to market with a daily validity. If the order is not executed and the closing price is higher than the day before, the threshold is automatically adjusted. If the order is not executed and the closing price is lower than the day before, the threshold remains unchanged.
Upon sale, the goal is to follow up with a value until the trend reverses and saves the maximum capital gain. Conversely, upon purchase, the goal is to buy securities when they are rising again.