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Order types we support

Order Types

We currently accept two types of orders:

  1. Market orders  
  2. Limit orders
  3. Stop orders*

*stop orders are only available for Passoflio Pro subscribers.


What are market orders?

Market orders are orders that are immediately executed at the current market price.

Keep in mind that once an order has been filled, it cannot be reversed. 

There might be cases where your order is not completely filled. For example, if you place a huge order and the stock is thinly traded, there might be a partial execution. If this happens, your order will remain open until there’s enough volume in the market to fulfill the remaining shares of your order, or until you cancel it.

If the latter happens, you will keep the shares that were purchased.


How do I place a market order?

To place a market order for a security, please follow these steps:

  1. Open your Passfolio app;
  2. Select the asset you would like to buy or sell;
  3. Click “Sell” or “Buy”;
  4. Select “Market Buy” or “Market Sell”;
  5. Choose how many shares or the amount in USD you would like to sell or buy;
  6. Review your order;
  7. Slide the button to submit your order.


What are limit orders?

A limit order is an order to buy or sell a security at or better than a specified price (a "limit price"). This means that you decide the price on which you want your order to be executed.

There are two types of limit orders:

  1. Limit Buy
  2. Limit Sell


A Limit Buy order can be executed only at or below the limit price you entered.

If an investor wants to buy a stock at $10,  a buy limit order can be placed, and the order will only be executed if the stock trades at $10 or lower. However, if the stock never reaches the price of $10, you may lose an opportunity to buy.

The same is true for a Limit Sell order. If an investor would like to sell a stock for $10, a sell limit order can be placed, and the order will only be executed if the stock trades at $10 or higher; but there is a chance the order may not be executed in case the stock never reaches the $10 price limit.



Why would I place a Limit Order?

This type of order is for investors who know the price they want for a particular transaction and want to manage market risk. Limit orders provide a guarantee that buy orders are not executed above a maximum price and sell orders are not executed below a set minimum. 

Limit orders are often used to realize the highest profit, or avoid a loss. However, this type of order does not guarantee execution. Therefore every order placed should be understood and analyzed before being placed.

What are the time restrictions for Limit Orders?

There are two time restrictions:

  1. Good for a Day (GTD): A limit order that expires at the end of the trading day;
  2. Good Till Canceled (GTC): A limit order that remains in effect until it is executed by the broker or canceled by the customer (up to 90 days).


What are the risks involved with Limit Orders?

The major risk with limit orders is that there is no guarantee that the order will be executed.

The security may simply not reach your limit price within the specified time limit, which can last till the end of the day that the order was placed, or until you cancel it (up to 90 days).



How do I place a limit order?

To place a limit order for a security, please follow these steps:

  1. Open your Passfolio app;
  2. Select the asset you would like to buy or sell;
  3. Click “Sell” or “Buy”;
  4. Select “Limit Buy” or “Limit Sell”;
  5. Choose the limit price you want;
  6. Choose how many shares you would like to sell or buy (no fractional shares allowed, only full shares);
  7. Select the expiration of your order;
  8. Review your order;
  9. Slide the button to submit your order.

What are stop orders?

A stop order is different from a limit order, or a market order. When an investor wants to buy or sell a stock once a specific price is reached (stop price), a stop order can be a useful option.  It is important to understand that the stop price serves as a trigger, which activates a market order. The market order is executed at the best price available.* A common use of stop orders is to help investors avoid potential losses in case the stock drops to an undesired price.

*There is no guarantee that if a stop order is triggered, the investor will pay or receive the stop price.

How do I enter a Buy Stop Order?

When an investor believes there is a buy opportunity at a given price, which is above current market price, he or she can place a buy stop order. This way the investor would not “miss a perceived buy opportunity” once the stop price is reached. When the stock price reaches the stop price a market order is activated and the order gets executed at the best price available.

Example

ABCD stock is trading at $10 per share. You, as the investor, understand that once the ABCD stock price reaches $15, it could go even higher. In this case, you can set a stop order with a stop price of $15, and once ABCD hits $15 per share, a market order will be activated and executed at the best price available. If ABCD stock price never reaches $15, your stop order won’t be executed.

Here is the step by step on how to enter a stop order:

  1. Open your Passfolio app
  2. Select the stock you would like to trade
  3. Tap Buy or Sell
  4. Tap on Stop
  5. Choose the Stop price
  6. Tap Continue
  7. Choose the expiration date
  8. Tap Continue
  9. Choose the amount of shares
  10. Review your order
  11. Submit order

How do I enter a Sell Stop Order?

When an investor wants to protect its position in a given stock, he or she can set a sell stop order with a price below the current market price. If the stock price reaches the stop price, a market order is activated, and sold at the best price available.

Example

ABCD stock is trading at $10 per share. You, as the investor, understands that if ABCD trades below $5, the stock price could go even lower. Therefore ,you would like to sell your shares of ABCD when they reach $5. You can set a sell stop order with a stop price of $5, and as soon as the stop price is reached, a market order is activated, and sold at the best price available. If ABCD stock price never reaches $5, your stop order won’t be executed.

Here is the step by step on how to enter a stop order:

  1. Open your Passfolio app
  2. Select the stock you would like to trade
  3. Tap Buy or Sell
  4. Tap on Stop
  5. Choose the Stop price
  6. Tap Continue
  7. Choose the expiration date
  8. Tap Continue
  9. Choose the amount of shares
  10. Review your order
  11. Submit order

It's important to keep in mind that you can't completely eliminate market and investment risks. You can't predict when periods of market volatility will hit, so it is often best to decide what is most important to you based on your investment goals and objectives, whether it be price or making a trade at a specified time. In general, understanding order types can help you prioritize your needs, manage risk, speed execution and provide price improvement. For all of your securities transactions, check the trade confirmation you receive from your firm to make sure the price, fees and order information is accurate. For more information access: https://www.finra.org/investors/alerts/understanding-order-types-can-save-time-and-money.

Keep in mind that all orders are not handled the same way by your financial firm. Ask about your firm’s procedures for handling the execution of securities transactions and different order types, particularly during volatile market conditions. Market orders typically receive the highest priority, followed by limit orders.

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