Futures Trading Education - Commodity Market Order Types

Being familiar with the various types of orders and properly placing them is important. With quickly changing market conditions, sometimes every minute can count and knowing which order type is appropriate and placing it accurately can be a crucial factor to your trading success.

Market Order

The most common order. This order type instructs a broker to execute a trade at the best possible price available.

Limit Order

This order initiates the trade at a specific price 'or better' if able. For example, Buy 1 September CBOT T-Bond at 105^16 limit order means a trader will be long only at 105^16 or less. Traders should note the market may hit the limit price and yet not fill the order. Limit orders to buy are placed below the currency market price and limit orders to sell are placed above the current market price.

Stop Order

This order becomes a market order only when the specified price level is reached. A buy stop is placed above the market and a sell stop is placed below the market.

Stop Limit Order

A stop-limit order will be executed at a specified price (or better) after a given stop price has been reached. Once the stop price is reached, the stop-limit order becomes a limit order to buy (or sell) at the limit price or better. For example, Sell 1 September CBOT T-Bond at 105^16 Stop Limit 105^12.

MIT (Market If Touched)

This order is similar to a stop order in that it is executed only if the price reaches a specified level. The difference is an MIT to sell is placed above the market and an MIT to buy is placed below.

FOK (Fill or Kill)

These orders are limit orders sent to the pit to be executed immediately or canceled.

MOC (Market On Close)

These orders are executed within 30-60 seconds of the close and must be within the closing range of prices.

If Done / When Done (Also referred to as a contingency orders or conditional orders)

An if done order will only become activated when the order to which it is attached is executed.

One Cancels Other (OCO)  (Also referred to as a contingency orders or conditional orders)

An order where if one order is filled, the other order is cancelled

Day Order

Any order to buy or sell that automatically expires if not executed on the day the order is placed. Orders are automatically day orders unless otherwise specified.

GTC (Good Until Canceled)

These orders often called open orders are always considered active orders until filled, canceled, or replaced by another type of order.

Straight Cancel

This completely eliminates a previously placed order

Cancel/Replace

This cancels & replaces a previous order by changing either the price, type, or quantity.

It should be noted that not all exchanges accept all types of orders. Additionally, individual floor brokers may not accept all types of orders. The types of orders that are accepted are subject to change without notice.

Order Placement

Know where the market is trading. Many times, traders will place orders that are currently "through their price". In addition, if you are placing orders after market hours, be aware that the market can open anywhere within the daily trading limits (if trading limits exist within that specific market)

• State your name & commodity account number
• Specify a buy or sell
• State the quantity
• Specify the market
• Specify the month and if applicable the strike price if it is an option order.
• Specify what kind of order you are placing (i.e. limit, Stop, MIT etc.)
• Include any special instructions such as if you are filled-where you would like a stop loss and/or profit taking placed.

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