-The instruction, by a customer to a brokerage, for the purchase or sale of a security with specific conditions.  

There are several different types of orders, each offering different conditions.

Market Order

-An order to buy or sell a stock immediately at the best available current price.  

A market order guarantees execution, and it often has low commissions due to the minimal work that brokers need to do. Be wary of using market orders on stocks with a low average daily volume: in such market conditions the ask price can be a lot higher than the current market price (resulting in a large spread). In other words, you may end up paying a whole lot more than you originally anticipated! It is much safer to use a market order on high-volume stocks, such as Microsoft or Wal-Mart.

A market order is sometimes referred to as an unrestricted order.

Limit Order

-An order placed with a brokerage to buy or sell a set number of shares at a specified price or better. Limit orders also allow an investor to limit the length of time an order can be outstanding before being cancelled.  

Limit orders typically cost more than market orders. Despite this, limit orders are beneficial because when the trade goes through, investors get the specified purchase or sell price. Limit orders are especially useful on a low-volume or highly volatile stock.

Conditional Order

-A type of order that will be submitted or cancelled if set criteria are met, which are defined by the trader/investor entering the order. This allows for a greater customization of the order to meet the specific needs of the investor.  

For example, say an investor enters a limit order to buy shares at $45, but only once the shares have first reached $50 (confirming a breakout). The limit order at $45 will be submitted to the brokerage firm only once the shares have reached the $50 price. Conditional orders allow traders to enter into a trade without having to constantly monitor the market, allowing them to be as fast as the market.

Discretionary Order

-An order giving a broker the ability to decide when to buy/sell securities at the best possible price for the customer. Some discretionary orders place restrictive terms to limit the amount of discretion the broker has.  

When placing a discretion order, the investor is giving limited discretion to the broker and allowing for the timing of buying/selling to be decided by the trader.

Stop-Limit Order

-An order placed with a broker to buy or sell at a specified price (or better) after a given stop price has been reached or passed. This is essentially a combination of a stop order and a limit order into one order and allows the investor to better control their entry or exit price of a security.  

A stop order is an order that becomes executable once a set price has been reached and is filled at the current market price. A limit order is one that limits the entry or exit price to a set price or better. By combining the two orders it prevents the stop order from being executed at the market price which could be much different than what the investor originally wanted by putting a limit on the price.

For example let us assume that ABC Inc. is trading at $40 and an investor has put in a stop-limit order to buy at $45. If the price of ABC Inc. moves above $45 the stop order to buy the security becomes executable but because there is also a limit order attached it limits the price that the shares can be purchased to $45 or less. In terms of buying a stock it allows investors to buy when the stock has upward momentum behind (moving from $40 to $45).

Day Order

-Any order to buy or sell a security that automatically expires if not executed on the day the order is placed.  

A day order will not be executed if the limit or stop order prices were not met during the day. A way to increase the life of an order is to order securities on a 'good 'till cancelled' basis, where, as the name implies, the trade will not expire until it is cancelled or until it reaches a maximum time limit set by the brokerage.

Stop Order

-An order to buy or sell a security when its price surpasses a particular point, thus ensuring a greater probability of achieving a predetermined entry or exit price, limiting the investor's loss or locking in his or her profit. Once the price surpasses the predefined entry/exit point, the stop order becomes a market order.

-Also referred to as a "stop" and/or "stop-loss order".  

Investors commonly use a stop order before leaving for holidays or entering a situation where they are unable to monitor their portfolio for an extended period.

Stops are not a 100% guarantee of getting the desired entry/exit points. For instance, if a stock gaps down then the trader's stop order will be triggered (or filled) at a price significantly lower than expected.

Traders who use technical analysis will place stop orders below major moving averages, trend lines, swing highs, swing lows or other key support or resistance levels.