Explanation of buying and selling orders in stocks and currencies

Explanation of buying and selling orders in stocks and currencies

Explain buying and selling orders in stocks and currencies because it is one of the most important things that a trader should learn and know well

Explanation of buy and sell orders in stocks

Every trader who has made a deal at least once in the financial markets has come across the concept of the price of an asset.

The price is what we see in the first place, buying or selling an asset or commodity, whether it is stocks, futures or currencies.

We also judge the value of the purchased product by its price, and there is even a special term in the stock market – over- or undervalued stock.

However, this expression is often applied to other asset classes.

Many traders do not always think about how the market is accepted, i.e. at the current price. Or maybe sometimes it is worth waiting and not buying stocks, currencies, or… contracts futures at the present time.

Often by the time a trader considers entering a trade, the price has already crossed.

In such cases more experienced traders use future orders or pending orders, as they are also called in trader’s slang.

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Buy and sell orders in stocks and currencies

A pending order or a future order is basically an application to buy or sell an asset at the requested price i.e. a price that is not yet available.

For example a trader who places a pending buy order and places a buy limit order. It suggests that the price in the future will be lower than now. And he will be able to buy the asset at a more reasonable price that suits him.

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A pending order is an application to buy or sell an asset at a price different from the current price. The price indicated in the pending order may be higher or lower than the market price, i.e. the current price.

Perhaps the most popular buy limit order is the buy limit order mentioned above.

An example would be an application to buy a stock at $125 per share at a current price of $130 per share.

Thus the trader believes that the market price is still high and waits for the price of the asset to fall in order to buy it a little cheaper.

It is far from a fact that this level of price will be reached in the near future, but if prices fall to $125 or less. The broker will apply this (order) and the trader will buy the shares at $125 per share.

The difference between a pending order and a market order

In explaining buying and selling orders in stocks and currencies, we show you the main difference between a pending order and a market order is its price.

If a market order is a trader’s offer to buy or sell at the current price (market price) currently prevailing.

The pending order gives the broker an order to execute the order, or in other words, to convert it into a transaction at a price different from the current one. Provided, of course, that this price is reached in the market.

Another difference is the time factor. A market order is executed “here and now,” and within milliseconds, the trader is already in an open position. A pending forex order will not be executed immediately, which is evident even from the name of the order. It will be “delayed” until such time as market prices reach certain levels.

So in addition to price, forex pending orders also vary in execution time. This time can range from several seconds to several years.

In other words, the price you set in the order can be reached in a few seconds, over weeks, months or even years. Until this happens the pending order will be “paused” pending execution.

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The difference between a pending order and a market order
The difference between a pending order and a market order

Types of pending orders

Explanation of buy and sell orders in stocks and currencies, there are a large number of different types of buy and sell orders in stocks andfinancial markets. Each has its own characteristics and application situations.

If some orders allow the trader to buy an asset upon reaching a lower and more favorable price, other orders, on the contrary. It allows you to buy or sell shares currency pair After breaking through a certain level, when only the price is more expensive than the current market price.

Of course, pending orders are divided into buy and sell orders.

The 4 most important types of pending trading orders are:

  • Buy Limit
  • Buy Stop
  • Sell ​​Limit
  • Sell ​​Stop

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Types of pending orders
Types of pending orders

Buy Limit Order

It’s a best buy order. The trading platform will not let you Metatrader be it MT4 or MT5, by placing a Buy Limit order at a price higher than the current price.

So when placing a buy limit, the trader wants to buy an asset at a price lower than the current market price. If of course this price is reached in the market. If the bids do not fall to the required level, you should not expect the order to be triggered and converted into a bargain.

BUY STOP order

An order to buy at a price higher than the current price. Such an order can immediately cause surprise and many questions, what is the point of buying an asset with a pending order at a price higher than the market price?

But there is an idea in it! Such a situation or pattern may develop in the market when a trader wants to buy only after a certain price level has been crossed.

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SELL LIMIT

An order that a trader wants to sell at a price higher than the current market price. In other words, you want to go short, but the current price, i.e. the market price, is not quite right for you.

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SELL STOP

It is a sell order but at a lower price than the current price.

Advantages of using buy and sell orders

There are some advantages of using buying and selling orders in stocks and currencies, and among those advantages we will show you:

  • One of the most important features of buying and selling orders in stocks is that the pending order enables you to complete the purchase or sale of an asset, which includes stocks or currencies.
  • Also, one of the advantages of buying and selling orders is that it gives the trader the advantage of buying and selling shares at a price that is not available or at a suitable price for the currency.
  • Commissions on buy and sell orders are cheaper than limit orders.
  • Easy to understand orders trade The market is for beginners, and one of the advantages of stock buy and sell orders is the clear fundamentals that are put into all advanced orders.
  • Buying and selling orders are also characterized by flexibility, by providing different types of traders, enabling them to choose between several alternatives, commensurate with the needs of each of them.
  • One of the advantages of stock trading orders is the ability to control price and momentum. By relying on the type of command itself. Accordingly, you will be able to decide where to buy and sell, with the ability to specify how long the order remains active.
  • Equity trading orders also provide you with great hedging tools, which enable traders to take advantage of all types of stocks, and reduce the percentage of interest rates Risks associated with rapid price fluctuations.
  • For beginners, stock trading orders give them great hedging tools that enable them to be sure of the stocks they own, and for advanced beginners; It gives them the freedom to experiment with risky strategies without worrying about their portfolio.

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