Advanced Order Types Available

Many brokerage accounts allow you the ability to select from "Advanced Order Types" in addition to the basic buy and sell orders. They are often called "Conditional" orders.

These types of orders are useful in that they are another tool you can use to help manage risk. Make sure you check with your broker to see which ones they offer and the specifics and guidelines for each.

Also keep in mind that the following advanced orders must be placed on the same trade ticket, at the same time.

Here are some of the most common types that I have come across:

Contingent Order

A Contingent Order is an advanced order type that can be used when you would like to place a trade only after certain conditions are met. One of the main benefits of this type of order is that with some brokers, it is not live in the market until the conditions are met.

Multi-Contingent Orders

A Multi-Contingent Order is similar to a Contingent Order, except that a combination of two conditions must be met before the trade is placed.

The two conditions can also be linked with "And at the same time"; "Or"; and "Then".

  • "And at the same time" would be chosen if both conditions must be met at the same time.
  • "Or" would be chosen if either one of the two conditions must be met.
  • "Then" would be chosen if the conditions must be met in a sequential order.

One-Triggers-the-Other(OTO) Order

This advanced order type creates two orders, a primary and a secondary order. If the primary order executes, the secondary order automatically triggers.

In this case, the primary order is live in the market, the secondary is not. Once the primary order triggers, the secondary then becomes live.

By using a OTO order, you can save time in placing two separate orders, as well as taking some emotion out of your trading decisions. An example would be:

You place a primary order to buy 100 shares of XYZ stock at a limit of $30.00; you also place a secondary order as a sell; sell stop; or sell trailing stop order to be triggered if the primary order executes.

So if the buy order got executed and filled, the secondary order would automatically be placed to help minimize losses without the risk of you having to second guess yourself.

If you have a trading plan that works well but you have a hard time accepting losses, this is a great tool to help get over this obstacle.

One-Cancels-the-Other(OCO) Order

This advanced order type creates two live orders at the same time.

A quick example would be:

  • You own 100 shares of XYZ stock that you bought at $25.00
  • Your trading plan and rules have a profit target of 20%, or $5.00 in this case, and a maximum acceptable loss of 20% as well.
  • You place a OTO order with a sell limit order at $30.00 and a sell stop order at $20.00 at the same time, on a OCO order ticket.

Now if the price goes to $30.00 your sell limit order would execute, while at the same time the sell stop order would be cancelled. If the price goes down to $20.00 instead, your sell stop order would be executed and the sell limit order would be cancelled.

Trailing Stop Order

A Trailing Stop order can also be used by itself to help minimize losses as well as protect profits.

You can place this order right away when you enter into a position, or any time after. Used by itself, it is not placed on the same order ticket when you enter into a position.

As I mentioned above, please check with your individual broker as to which Advanced Order Types are available to you with your account.

Related "Advanced Order Types" Pages on This Site:

Return From "Advanced Order Types" To "Risk Management"

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