What are the different order types?

We offer three types of orders on Stake:  

• Limit

• Market 

• Stop   

Limit orders

A limit order is an order to buy or sell a whole number of shares at a specific price or better.  

A buy-limit order can only be executed at the limit price or lower. A sell limit order can only be executed at the limit price or higher. A limit order is not always guaranteed to execute. It will remain pending in the market until it’s either filled, expired, or cancelled.

There are two expiry options: End of Day (EOD) or Good-Til-Cancelled (GTC). EOD limit orders will expire at the end of that trading day if not executed. GTC orders (that aren’t cancelled or filled) are valid for 30 days – and on the Stake app, you can also choose 90 days. 

Market orders

A market order is an order to buy or sell shares at the best available market price at the time of placement. This is the most common type of order available on the ASX. 

Market orders work a little differently on the ASX compared to the U.S. markets: they’re submitted as ‘market to limit’ orders.

What is a ‘market to limit’ order?

After an ASX market order is sent, it actually gets converted to a limit order: a limit price is placed a certain % deviation away from the current market price. This limit price is set as better than the market, so as to have the best possibility of being immediately filled.

For example:

• The bid for stock ABC is $100.00 while the ask is $100.01

• You place a market order to buy ABC. The ‘market to limit’ order is actually placed at a limit price of $101 (1% deviation higher)

• You’re filled at $100.01 since this is the best price. Your market-to-limit order specified that you would pay no more than $101 for the stock, i.e. $101 would be the limit (maximum) you would pay for the stock, but you can still be filled for a lower price. The exceptions to this would be during market open or during market close as the order can be filled at a higher price than the limit price amount

• Vice versa for a market sell order

Stop orders 

A buy stop order is entered at a stop price above the current market price, while a sell stop order – also known as stop loss – is entered at a stop price below the current market price. Stop orders can be used to limit losses or lock in profits when the price of a stock fluctuates. 

If the stop price is triggered, Stake will place a market (market-to-limit) order, which will remain active until it is filled, cancelled, or expires at the end of that day.

Even if your stop price is triggered, there is no guarantee that your market order can be successfully placed with the broker, that it will be filled close to the trigger price, or that it will be filled at all.

What are some considerations with stop orders?Execution variability: While stop loss orders aim to sell at or near the specified price, execution is not guaranteed at the exact stop loss level. Market conditions, liquidity and price gaps can result in executions at different prices than intended, especially during periods of high volatility.

False triggers: In some cases, limit and stop loss orders can be triggered by short-term market fluctuations or intraday price volatility, resulting in premature selling. This can lead to missed opportunities if the market subsequently reverses and continues in the expected direction. To learn more about stop orders, you can head to our Stake Academy blog post here.