Spread Betting Order Types

It is very difficult to make profits with financial spread betting over time without having a strong knowledge of all the different types of orders, fully understand what the different orders are, their individual advantages and disadvantages and most importantly how and where to use them. In addition to the ordinary instant execution orders, which can be placed online or over the phone, financial spread betting companies offer many different order types. All of these orders can be either good for the day (GD) or good until cancelled (GTC). Apart from Guaranteed Stop Loss Orders they are also free to place, amend and cancel.

Limit orders

Limit Orders are an instruction to trade at a price you determine for the purpose of executing the order at a price that is more favourable than the current market price. A buy limit is an instruction to execute at a price lower than current market price and a sell limit order is an instruction to execute at a price higher than the current market price. The advantage of this type of order is that investors get filled when the market price moves to the price they wish to place their orders at, but the risk is that investors may end up not executing any order if the market price never moves that far.

Stop orders

Stop Orders - are an instruction to trade at a price you determined for the purpose of executing the order at a price that is less favourable than the current market price. A buy stop is an instruction to execute at a price higher than current market price and sell stop order is an instruction to execute at a price lower than the current market price. They are often placed to trade at a specified price to restrict losses, such as protecting you from sharp falls in share price. The stop orders specify the price at which the trade should be executed, they are not executed of the market price doesn't reach your specified price and they are used to limit losses. See Guaranteed Stop Loss Order for more information on stop orders.

OCO (One Cancels the Other)

OCO orders (one cancels other) are two orders linked to each other and held in one trading system. They allow you to link a Stop-Loss Order and a Limit Order to an open position. This is generally used to control possible losses with the Stop-Loss Order and take possible profits with the limit order. If one of the orders is triggered, the open position is closed and the remaining order is automatically cancelled.

MOC (Market on Close Order)

This type of order is used frequently as investors like to clear up their positions at the close of business and go home with a peace of mind (no positions held). The MOC (market on close) is very simple and easy to understand, it is easily done by choosing a market buy order or market sell order that is executed right on close of business.

GTC (Good Till Cancelled)

The GTC (good till cancelled) type of order is self explanatory, the order you place will sit in the firm's trading system indefinitely unless you cancel it or the limit price is reached. You can get into trouble if you open GTC orders and you forget about cancelling them; it is always good to keep track on this type of orders.