AAII Journal > April 2004
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Your Order Please: A Guide to the Different Ways to Buy and Sell Securities

Once you've made up your mind about a stock, the rest is easy, right? Just call up your broker and say "buy" or "sell."

Unfortunately, it's not always that simple. There are multiple ways to give buy and sell instructions to a broker, and just as many ways to get burned if you mess up.

Here is a rundown of the most common types of orders used by most stock exchanges and brokers. Some brokers, though—especially the on-line variety—may not accept every type of order, so check ahead of making your transaction.

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Day Orders vs. GTC Orders

Day orders are good for the current trading session only, and are automatically canceled if not filled by day's end. Good-till-cancelled (GTC) orders remain in effect until canceled by the customer or executed by the broker. However, some brokers will cancel GTC orders after 30 to 60 days, so it's always good to check in with your broker to make sure that a GTC order is still good.

GTC orders are usually used by price-sensitive investors who have longer time horizons.

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Discussion

SSR says it is always safer to employ limit orders. If you are buying, you have to set the limit price below the current market price. This means if the stock starts rising, your order will never be executed. Since your buy recommendations are based on stocks that you expect to rise in price, using limit buy orders seems questionable. I can envision using limit buy orders on many of the stocks you recommend with the result that none of them are ever purchased because they all go up in price and the order is never executed. Vice versa for limit sell orders. So my question is: why are you recommending limit orders?

posted about 1 month ago by N Crawford from Missouri

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