Thursday, June 14, 2012

Market Orders (MKT)

Market Orders are the most basic order type of the share trading. If you need to buy or sell typical shares at the market, what you should do is submit a Market Order.

Market Order Flow


 How:
But if you expected to execute your order, Need to consider the current market price before you submit the market order. If your order successfully executed, then it call as "Order Filled". If your is related to buy some shares, after order filled these shares updated to your account and relevant amount of money reduce from your trading account. If your order is related to sell some shares, then after order filled reduce this number of shares from your account and update your account with relevant amount of money you received  by specific trading.

Validity:
Most of the time submitted market orders valid within the whole day. After market closed for the specific day, all the so far not executed orders will be cancel and and notice to the order submitted users. If you think  share may goes up for some particulate counter,  you can submit sell orders with higher price that existing price of the market. If price goes up and reach to your submitted price, then there mat be possibility to fill your order. If you willing to buy shares and also you think market price goes down for some specific counter then you can submit buy order with less price then current existing price. If market reached your conditions, then your order may fill.

Partially Filled:
Some time market orders may reached to the price expectation but the numbers of shares not enough to full-fill the order. In this kind of situations, order execute for the existing number of shares and it call "Partially filled"

As example:

Kevin submit sell order with 2000 shares for $225 price for counter AAA
Jhon submit buy order with 900 shares for $225 price for counter AAA

So here buy order and sell orders are matching by price and quantities are not same. then order executed for 900 shares.
Then
Kevin get notice "Order Partially filled for 900 shares at $225"
Jhon get notice "Order filled for $225"

Risk Management:
If you use brokerage to submit order to the share market, then they are doing some risk check before submit your orders the the market. This checks can be vary for country by county, market by market or brokerage by brokerage. fallowing are the some factors they are checking.

1. Trader having enough money to buy the shares.
2. Order quantity is less than to min quantity or higher than the max quantity  that can trade for specific counter.
3. Is this order accept the government regulations.
4. Is this market trading hours.

1 comment: