Different types of orders are used for different reasons. The following are common stock order types in Japan.
The most common order type is Market Order, which executes your trade at the current market price. It means that it can feasibly execute above or below the average price for a stock, depending on what the market is doing.
However, there are other types of orders designed to make sure you get a particular kind of execution when there’s not enough volume available on the books at the current market price.
Some order types allow you to manually set your price if you wish, which can be helpful in convincing investors with some flexibility in their budgeting habits.
A limit order, also called a ‘limit sell’ or ‘sell limit order’, is an instruction to sell at the best available price above the security’s current market price.
A limit order with the same terms as a market order but with a specific minimum sale price that will not execute unless that maximum becomes attainable is often referred to as a “sell stop” or an “at-market” sell).
This type of day trading can be hazardous because if you do not set your stop loss high enough, it will get triggered by fear and bad news about the company, which causes prices to fall rapidly.
It takes lots of training to become good at day trading. You can also see this article for more details.
If not executed, a day order is an order to buy or sell that expires at the end of the current trading day.
The execution time for all orders, including day orders, depends on market conditions. Because computerized systems are linked worldwide, traders may buy and sell securities in Japan before the Tokyo Stock Exchange opens for trading there. Since a “day order” does not remain open until after trading ends in Japan, it may execute when the price of a security is significantly different than when you place an order.
A good-till-cancelled (GTC) order remains in effect until you cancel it. It is often used to open long-term positions on stocks you want to buy and hold for an extended period or close out long-term positions.
A GTC order can remain in the system, so brokers sometimes refer to them as “standing orders” or “good till cancelled orders.” If your stock doesn’t pay a dividend, you may want to use a GTC order instead of placing the same order repeatedly.
In that case, your broker will not execute the trade until the security reaches the target price that you set when you created your standing order.
A day-of-the-week (DOW) instruction is to buy or sell given security only on certain days of each week – typically Monday through Friday.
For example, you might place a DOW order instructing your broker to buy on only Mondays and sell on only Fridays.
FIFO means “first in, first out.” It’s an accounting term that describes the order in which assets are recorded when you sell securities. When you record your purchases and sales of security, you use FIFO to track how much profit or loss each sale generates.
Let’s say you buy 100 shares at $20 per share on Monday, then buy another 100 shares at $30 per share on Tuesday, and finally, sell 200 shares at $25 per share on Thursday.
Your broker will calculate your investment capital by taking the average price of all 300 total shares – ($20+$30+$25)/300 = $27.50 -and multiplying that by the number of shares you still own, which in this case is 50.
Your broker will report your ending investment capital as $1375 (50 shares times $27.50) even though you originally paid $1500 for all 500 shares.
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