Stop Order Types
A Stop order is usually used to close a position when the market is going against it with a view to prevent further losses. It may also be used to open a position when the market moves through a chosen level.
- A Sell Stop order is always placed below the current market price
- A Buy Stop order is always placed above the current market price
A Stop order can rest at Saxo with the following durations:
- Day Order (DO): Valid until the official close of trading on the day the order is placed (or on the subsequent business day for orders accepted during the weekend).
- Good Till Date (GTD): Valid until the official close of trading on a date of the client’s choice.
- Good Till Cancelled (GTC): Valid indefinitely unless or until specifically cancelled by the client. Where an order is attached to an open position, it will automatically be cancelled if the position is closed.
A Stop order will be triggered when the current market price reaches the specified price level. Clients should be aware that the default trigger method for Stop orders can differ depending on the type of product (e.g. FX, Equities, Futures etc.). Once triggered, the order will be treated as a Market order.
A Market order is a traditional ‘at best’ instruction to trade as much of the order as possible on the best available terms in the market. A Market order will normally be filled immediately (or failing that in a relatively short time). If it can’t be filled in full immediately, Saxo will continue to work the order until the official close of the relevant market.
The trigger level for a Stop order can be specified to trail the market. In this case, when the market moves in the client’s favour, the trigger level for the order moves the same way. The trigger level for a trailing stop moves in steps which are defined when the order is placed.
Stop Limit Order
A Stop Limit order rests in the same way as a Stop order. However, once triggered, rather than execute at the next available price it converts to a Limit order at a pre-agreed Limit price. From that point on, the order is treated as a Limit order. This type of order gives the client some protection from a bad fill in a gapping or illiquid market. Trailing Stop Limit orders are not available.