Chaptere 14: The Basics of Trading a Stock: Know Your Orders Flashcards

1
Q

A _______________ is the most basic type of trade. It is an order to buy or sell immediately at the current price.

A

market order

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2
Q

Typically, if you are going to buy a stock, then you will pay a price at or near the posted ____.

A

ask

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3
Q

If you are going to sell a stock, you will receive a price at or near the posted ______.

A

bid

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4
Q

are popular among individual investors who want to buy or sell a stock without delay.

A

Market orders

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5
Q

do not guarantee a price, but they do guarantee the order’s immediate execution.

A

Market orders

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6
Q

sometimes referred to as a pending order, allows investors to buy and sell securities at a certain price in the future.

A

limit order

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7
Q

In effect, a __________ sets the maximum or minimum price at which you are willing to buy or sell.

A

limit order

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7
Q

This type of order is used to execute a trade if the price reaches the pre-defined level; the order will not be filled if the price does not reach this level.

A

limit order

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8
Q

four types of limit orders

A
  1. Buy Limit
  2. Sell Limit
  3. Buy Stop
  4. Sell stop
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9
Q

an order to purchase a security at or below a specified price.

A

Buy Limit

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10
Q

an order to sell a security at or above a specified price.

A

Sell Limit

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11
Q

an order to buy a security at a price above the current market bid.

A

Buy Stop

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12
Q

an order to sell a security at a price below the current market ask.

A

Sell Stop

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13
Q

to buy becomes active only after a specified price level has been reached

A

stop order (known as the stop level).

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14
Q

is also referred to as a stopped market, on-stop buy, or on-stop sell, this is one of the most useful orders.

A

Stop-Loss Order

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15
Q

This order is different because, unlike the limit and market orders, which are active as soon as they are entered, this order remains dormant until a certain price is passed, at which time it is activated as a market order.

A

Stop-Loss Order

16
Q

These are similar to stop-loss orders

A

Stop-Limit Order

17
Q

There are two prices specified in a stop-limit order: .

A
  1. stop price
  2. the limit price
18
Q

which will convert the order to a sell order

A

stop price

19
Q

Instead of the order becoming a market order to sell, the sell order becomes a limit order that will only execute at the limit price or better.

A

Stop-Limit Order

20
Q

This type of order is especially important for those who buy penny stocks.

A

all-or-none order

20
Q

This can mitigate a potential problem with stop-loss orders, which can be triggered during a flash crash when prices plummet but subsequently recover.

A

Stop-Limit Order

21
Q

ensures that you get either the entire quantity of stock you requested or none at all.

A

all-or-none order

22
Q

mandates that whatever amount of an order that can be executed in the market (or at a limit) in a very short time span, often just a few seconds or less, be filled and then the rest of the order canceled.

A

IOC order

23
Q

True or False

If shares are traded in that “immediate” interval, then the order is canceled completely.

A

False

If no shares are traded in that “immediate” interval, then the order is canceled completely.

24
Q

This type of order combines an AON order with an IOC specification;

A

Fill or Kill (FOK)

25
Q

in other words, it mandates that the entire order size be traded and in a very short time period, often a few seconds or less. If neither condition is met, the order is canceled.

A

Fill or Kill (FOK)

26
Q

This is a time restriction that you can place on different orders.

A

Good ‘Til Canceled (GTC)

27
Q

will remain active until you decide to cancel it.
Brokerages will typically limit the maximum time you can keep an order open (or active) to _______.

A

Good ‘Til Canceled (GTC); 90 days

28
Q

This means that after the end of the trading day, the order will expire. If it isn’t transacted (filled) then you will have to re-enter it the following trading day.

A

Day

29
Q

sometimes called a profit target Execution of a ____________ closes the position.

A

take profit order

30
Q

is intended to close out the trade at a profit once it has reached a certain level.

A

take profit order

31
Q

This type of order is always connected to an open position of a pending order.

A

take profit order

32
Q

True or False

Not all brokerages or online trading platforms allow for all of these types of orders.

A

True

33
Q

Who are you?

A

A CPA, RMT, MD, ATTY, MBA, & has 3 certifications is belt (CFMP, CAEA, CATA)