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Stop Orders

Stop orders are placed either above or below the market. These orders are especially good for exiting positions when they go against you or for entering markets on breakouts. The problem with stop orders is that you will not necessarily be filled at your price in a fast market. Frequently many sharp and sudden moves in the currencies, T-bond futures, or S&P futures will result in considerable slippage of buy-and-sell stop orders. The best way to avoid this is to use a stop limit order, described below.

Stop Limit Orders

A stop limit order is a stop order with a price limit on it. The reason for using such an order is to allow more flexibility in obtaining a fill. Therefore, when you place a buy stop limit order at 6450 with a limit of 6465, this means that you will accept a fill within these limits inclusive. The good part of such an order is that it permits the floor broker more leeway in filling you and therefore improves the odds that you will be filled. Such an order protects you from too much slippage. Stop limit orders should be used more often, although few traders actually use them.

Good-Till-Canceled Orders

A good-till-canceled order does exactly what its name suggests. It is an order that will remain in the market until canceled or filled. This order is also called an open order. Typically all open orders are canceled by your broker at the end of each calendar month and must be reinstated. In practice, day traders have no need for GTC or open orders, since their work is done at the end of each day.

One Cancels the Other (OCO)

This is an order qualifier. It allows a trader to have two orders entered simultaneously with the cancellation of one contingent upon the fulfillment of the other. In other words, when one of the orders is filled, the other will be canceled. This is a good way ol bracketing markets for either of two possible outcomes. As in the case of several other orders noted previously, some exchanges dc not accept such orders.