Financial Markets Book Financial Markets For The Rest Of Us
An Easy Guide To Money, Bonds, Futures, Stocks, Options, And Mutual Funds
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by Robert Hashemian

Page 154

of one business day, until the market closes. If by market close your order has not been executed, your order is cancelled and you must place a new order for the next day. Day orders placed after the market closing hours are automatically queued for the next day. That is, they become Day orders the next day the market opens.

The reason I prefer Day orders over GTC orders is that with unexecuted GTC orders, you may forget about the pending order and the order may get executed weeks after placement, when you may not want it anymore. For example, by the time your GTC sell order is executed, you may have wanted to hold on to the stock much longer.Or with a GTC buy order, you might have already bought the stock and the forgotten order may kick in later on, drawing on your margin. Day orders, which are automatically cancelled at the end of the day if remain unfilled, give you a chance to think about your transaction and enter a new order (perhaps at a better price) the next day. It is a much safer way to trade.

There is yet one final specification you can place on your orders, known as All or None (AON). With AON orders you specify to your broker that you would like to have your entire order executed in one block, or not at all. When you place a normal stock order, your entire order may not be filled in one shot. For example, a limit order to buy 100 shares of Ford at $50 may end up getting executed in 3 parts consisting of 40 shares, 30 shares, and 30 shares. Usually brokers do not charge extra commissions for these separate executions during the day so at the end of the day you would still end up with your entire order executed at your specified price. It is, however, possible that you may end up with partial executions for your order. For example, you may pick up 70 shares for the day but the stock price may start to move higher, never dropping back to your limit and you would end up with a partial execution. Or after the first 70 shares, the stock price may decline


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