Order Types

A MARKET Order is the simplest type of Order, and says "Trade this quantity at the best available price right now". A trader entering this Order is ready to accept the best available price on the other side of the Market.

If the MARKET Order is large, it may trade against the best Order on the other side, and then the next best, and so on, until it is completed. As such, the trader relinquishes control of the final average price, but has the best chance for completing their requested quantity.

A MARKET Order should only be used when an Order needs to execute as soon as possible. Otherwise, the best (and commonest) choice is to use a LIMIT Order.

MARKET Orders cannot match against other MARKET Orders; they can only match against a LIMIT Order on the other side of the Market. If there is a Buy MARKET Order and a Sell MARKET Order in the Market, they both sit working until a LIMIT Order enters the Market on the other side.

MARKET Orders are not shown in Price data.

A LIMIT Order stipulates a limiting price that the Order should not trade beyond. This type of Order says "Trade this quantity at a price that is at least as good as this limiting price". A trader entering this Order only wishes to trade with Orders that are at or better than the stated price.

For a Buy LIMIT Order (bid), the limiting price is treated as a maximum price that the trader is willing to pay. For a Sell LIMIT Order (offer), the limiting price is the minimum price that the trader is willing to accept.

The Market will try to match a LIMIT Order against the other side. If the other side has one or more MARKET Orders, these will trade with the LIMIT Order at the limit price. Once all MARKET Orders have been consumed, the best LIMIT Orders on the other side are considered.

If there is an exact match on price between LIMIT Orders, execution occurs at that price. If there is overlap, and the buy price is higher than the sell price, a mid-point price is calculated to share benefit between the Orders. If there is no overlap, the best buy is less than the best sell and matching ceases. The LIMIT Orders remain working until either they match, hit an expiry condition, or are canceled.

The Market depth is configured separately for each Market, and it determines the number of price levels displayed in the Price data for a Market. The LIMIT Orders that have not yet matched make up the data in the buy and sell side information for the Price data packet. With a depth of 5, the top 5 buy price levels and top 5 sell price levels are shown in the data, plus the last traded price and volume.

A STOPMARKET Order is held outside the Market while its trigger price is monitored against the last traded price. If the last traded price reaches or passes the trigger price in the triggering direction, the Order is converted to become an ordinary MARKET Order, and tries to match against the best available Order on the other side.

The triggering direction depends on the side of the STOP Order. A Sell STOP Order triggers when the last traded price is at or below its trigger price. A Buy STOP Order triggers when the last traded price is at or above its trigger price.

This type of Order is usually used as an "insurance policy" against a Market dropping quickly in price. For example, a Market is rising, and Alice has a position where she has bought 100 units. Alice expects the Market to continue to rise, but wants to avoid holding these 100 units if the Market suddenly drops. Alice would place a STOPMARKET Order on the Sell side for 100 units, with a trigger price that is a little below the current trading price. If the Market drops through the trigger price, the STOPMARKET Order triggers and a MARKET Order to sell 100 is immediately sent to the Market. This MARKET Order would match against the buy side and liquidate Alice's position. Alice would possibly lose money, but she views this as better than being left with 100 units when the price is falling rapidly.

The less common reverse situation applies. If a trader is trading in a falling Market and has a large short position, they could place a STOPMARKET Order a little above the current last traded price. If the Market rises unexpectedly, a MARKET Order on the Buy side is released to liquidate the short position and stop any massive losses. STOP-type Orders are so called because they attempt to stop losses.

The monitoring of the trigger price is part of the exchange matching routine. After each execution, the last traded price is checked against the trigger prices of held STOP-type Orders. This means that a qualifying price movement cannot be missed, and STOP-type Orders are guaranteed to trigger when their trigger conditions are met.

STOPMARKET Orders are held outside the Market whilst the last traded price is monitored, and as such do not appear in Price data. If and when the STOPMARKET Order triggers, it is converted to a MARKET Order and again is not shown in Price data.

A STOPLIMIT Order is held outside the Market while its trigger price is monitored against the last traded price. If the last traded price reaches or passes the trigger price in the triggering direction, the Order is converted to become an ordinary LIMIT Order, and tries to work in the Market alongside the current LIMIT Orders.

STOPLIMIT Orders use the same trigger direction rules as STOPMARKET Orders.

This type of Order is usually used as an "insurance policy" against a Market dropping quickly in price, but with more control than a STOPMARKET Order. A STOPMARKET Order has no limit price and will trade against any working LIMIT Orders on the other side of the Market when it is triggered. A STOPLIMIT Order has a limit price, and after triggering it might leave the trader still holding a dropping position. It is a strategic choice for the trader to decide which kind of Order suits them.

The monitoring of the trigger price is part of the exchange matching routine. After each execution, the last traded price is checked against the trigger prices of held STOP-type Orders. This means that a qualifying price movement cannot be missed, and STOP-type Orders are guaranteed to trigger when their trigger conditions are met.

STOPLIMIT Orders are held outside the Market whilst the last traded price is monitored, and as such do not appear in Price data. If and when the STOPLIMIT Order triggers, it is converted to a LIMIT Order and is shown as part of normal Price data alongside all other LIMIT Orders.

An Effective Order is one of the above Orders (MARKET/LIMIT/STOPMARKET/STOPLIMIT) that waits until a point in time before it is converted to become a working Order. Before the trigger time, the Order is suspended outside of the Market and is not visible to the Market. After the trigger time, the Order becomes an ordinary MARKET/LIMIT/STOPMARKET/STOPLIMIT Order.

If the Order has both an Effective trigger time and a STOP trigger price, the Effective trigger time takes precedence. The Order is ignored until the Effective trigger time passes. Once the Order is triggered to become a STOPMARKET or STOPLIMIT Order, its Stop trigger price begins to be monitored by the exchange matching routine. If the Market moved through the trigger price whilst the Order was held waiting for the Effective trigger time, that earlier price movement would be ignored. Once the Effective trigger time is reached and the Order becomes a STOP-type Order, if a subsequent execution results in the last traded price reaching or passing the Stop trigger price in the triggering direction, the Order will follow the normal Stop triggering rule and convert to an ordinary MARKET or LIMIT Order.

Effective Orders are not shown in Price data.