Description
The capital stock (or stock) of an incorporated business constitutes the equity stake of its owners. It represents the residual assets of the company that would be due to stockholders after discharge of all senior claims such as secured and unsecured debt.
TYPES OF ORDERS There are several different types of orders you can place when buying or selling a stock. The following briefly describes the more frequently used orders. Market Orders This is an order to buy or sell a specific number of shares at the best price available at the time the order is routed to the trading floor. Because market orders are normally executed immediately at the current market price after they have been routed to the relevant exchange, these orders are almost always filled within a very short period of time. However, because a market order cannot specify a price for the shares, the actual price at which the order will be filled will be unknown until the order is executed. Consequently, if the market price of the shares is rising quickly, a market order may be filled at a higher price than that quoted at the time the order was sent to the customer's broker for execution. Accordingly, if one wishes to buy or sell shares at definite price, a market order should not be used. Limit Orders Unlike market orders, a limit order permits you to specify the lowest or highest price at which you will sell or buy a specified number of shares. A limit order guarantees the price at which you will be filled, but it does not guarantee you an immediate execution - or whether your order will be filled at all. There are two main reasons for this. First, if you place a limit order to buy a stock at Rs 50.00 and the current market price is Rs 60.00, you will not be filled until the price drops to Rs 50.00 or less, which may never happen. Secondly, market orders take priority over limit orders. Consequently, even if you place a limit order to buy a specific stock at the current market asking price, you may not get an immediate fill if there are numerous unfilled market orders ahead of your limit order. In fact, you may not get filled at all if, after the outstanding market orders are filled, the price of the stock goes higher - above your limit price. Stop Loss Orders A stop loss order is an order to sell a stock at a price below the current market price. For example, suppose that you have just bought 1000 shares of XYZ at Rs. 50.00. You decide that you only want to risk Rs.5.00 per share on this transaction. Accordingly, you immediately place a stop loss order at Rs.45.00. This means that if the price of XYZ should drop to Rs.45.00, your broker will sell your 1000 shares
at a market price of (or close to) Rs45.00. The use of a stop loss order will therefore pre-determine the maximum loss a trader will incur. Fill-or-Kill Orders An order to buy or sell a specified number of shares that is routed to the trading floor for immediate execution. If the order cannot be immediately filled, it is cancelled (killed) automatically. Note that the order must be filled in its entirety. Partial fills are not allowed. Duration of Orders Good for the Day This condition specifies that the order is good for one trading day. Order expires if it is not filled by the end of the day. Good Until Cancelled This condition specifies that the order is good until it is either executed or cancelled by the customer.
doc_694186828.docx
The capital stock (or stock) of an incorporated business constitutes the equity stake of its owners. It represents the residual assets of the company that would be due to stockholders after discharge of all senior claims such as secured and unsecured debt.
TYPES OF ORDERS There are several different types of orders you can place when buying or selling a stock. The following briefly describes the more frequently used orders. Market Orders This is an order to buy or sell a specific number of shares at the best price available at the time the order is routed to the trading floor. Because market orders are normally executed immediately at the current market price after they have been routed to the relevant exchange, these orders are almost always filled within a very short period of time. However, because a market order cannot specify a price for the shares, the actual price at which the order will be filled will be unknown until the order is executed. Consequently, if the market price of the shares is rising quickly, a market order may be filled at a higher price than that quoted at the time the order was sent to the customer's broker for execution. Accordingly, if one wishes to buy or sell shares at definite price, a market order should not be used. Limit Orders Unlike market orders, a limit order permits you to specify the lowest or highest price at which you will sell or buy a specified number of shares. A limit order guarantees the price at which you will be filled, but it does not guarantee you an immediate execution - or whether your order will be filled at all. There are two main reasons for this. First, if you place a limit order to buy a stock at Rs 50.00 and the current market price is Rs 60.00, you will not be filled until the price drops to Rs 50.00 or less, which may never happen. Secondly, market orders take priority over limit orders. Consequently, even if you place a limit order to buy a specific stock at the current market asking price, you may not get an immediate fill if there are numerous unfilled market orders ahead of your limit order. In fact, you may not get filled at all if, after the outstanding market orders are filled, the price of the stock goes higher - above your limit price. Stop Loss Orders A stop loss order is an order to sell a stock at a price below the current market price. For example, suppose that you have just bought 1000 shares of XYZ at Rs. 50.00. You decide that you only want to risk Rs.5.00 per share on this transaction. Accordingly, you immediately place a stop loss order at Rs.45.00. This means that if the price of XYZ should drop to Rs.45.00, your broker will sell your 1000 shares
at a market price of (or close to) Rs45.00. The use of a stop loss order will therefore pre-determine the maximum loss a trader will incur. Fill-or-Kill Orders An order to buy or sell a specified number of shares that is routed to the trading floor for immediate execution. If the order cannot be immediately filled, it is cancelled (killed) automatically. Note that the order must be filled in its entirety. Partial fills are not allowed. Duration of Orders Good for the Day This condition specifies that the order is good for one trading day. Order expires if it is not filled by the end of the day. Good Until Cancelled This condition specifies that the order is good until it is either executed or cancelled by the customer.
doc_694186828.docx