20 terms
Orders & Execution — 20 terms defined
Every orders & execution term in the StockTools glossary, in plain language with a worked example — and connected to the free calculator that puts it to work.
AskThe ask (or offer) is the opposite side of the quote from the bid: the lowest price at which any seller is currently willing to part with shares, posted with a size. It is the price a market buy order pays.Orders & ExecutionBidThe bid is the highest price a buyer is currently posting for a stock, always paired with a size: a bid of $18.42 x 500 means someone will pay $18.42 for up to 500 shares right now. It is the price a market sell order receives.Orders & ExecutionBid-Ask SpreadThe bid-ask spread is the distance between the best bid and the best ask: a large ETF quoted $452.30 x $452.31 has a 1-cent spread (about 0.002%), while a $4.00 small cap quoted $4.02 x $4.10 has an 8-cent spread, a full 2% of the stock price. The spread is the market's posted price for immediacy.Orders & ExecutionDark PoolA dark pool is a private trading venue that matches orders without displaying them beforehand. No quotes appear on Level 2; the trade only becomes public after it executes, printing to the consolidated tape through a Trade Reporting Facility (TRF).Orders & ExecutionDay OrderA day order dies at the 4:00 pm ET close if it has not filled, in contrast to a GTC order that keeps working across sessions. It is the default time-in-force at nearly every broker: submit a limit order without touching the duration field and this is what you sent.Orders & ExecutionDirect Market Access (DMA)Direct market access lets a trader route orders straight to a chosen exchange, ECN, or dark pool instead of letting the broker decide where the order goes. The order you send is the order that hits the venue's book, under the broker's membership and risk checks.Orders & ExecutionECN (Electronic Communication Network)An ECN is an electronic system that matches buy and sell orders directly against each other, with no dealer in the middle. Orders rest in a visible book, and when a buy price crosses a sell price the ECN pairs them automatically — the model that Island and Archipelago pioneered in the late 1990s and that modern venues like NYSE Arca and Nasdaq inherited.Orders & ExecutionFillA fill is the execution of an order: the moment shares actually change hands, stamped with a price, a size, and a time. Until an order is filled it is an intention; the fill is the trade.Orders & ExecutionGood Til Canceled (GTC)A good til canceled (GTC) order stays working session after session until it fills or you cancel it, though most brokers impose a ceiling of 60-180 days before purging it. It is the time-in-force for orders built around price levels rather than around today.Orders & ExecutionHotkeysHotkeys are keyboard shortcuts that fire pre-configured orders instantly: one keystroke to buy 1,000 shares at the ask, another to flatten the entire position, no mouse and no order ticket. Active trading platforms exist largely because of this feature.Orders & ExecutionLimit OrderA limit order flips the market order's trade-off: it guarantees your price but not your fill. A buy limit executes only at your limit price or lower; a sell limit only at your price or higher.Orders & ExecutionMarket MakerA market maker is a firm that continuously quotes both a buy price and a sell price in a stock, earning the difference between the two. Quote a bid of $50.00 and an ask of $50.02, buy from sellers at the bid, sell to buyers at the ask, and the $0.02 spread is the revenue — repeated thousands of times a day.Orders & ExecutionMarket OrderA market order executes immediately at the best available price, consuming the order book level by level until the full size is filled. It guarantees the trade happens; it says nothing about the price you get.Orders & ExecutionOrder BookThe order book is the live ledger of resting limit orders in a stock, buyers stacked at descending prices below the market and sellers at ascending prices above it. Every quote you see is just the top row of this ledger; Level 2 is the window that shows the rest.Orders & ExecutionPartial FillA partial fill occurs when the market can only supply some of your order's size at your price; you receive the shares that were available, and the remainder either keeps working or cancels, depending on the order's time-in-force and instructions. It is the routine outcome of placing size in a thin book.Orders & ExecutionPayment for Order Flow (PFOF)Payment for order flow is money a wholesale market maker pays a brokerage for routing customer orders to it instead of to an exchange. It is the engine behind zero-commission trading: the broker charges you nothing because the wholesaler pays for the right to trade against your order.Orders & ExecutionSlippageSlippage is the gap between the price you expected and the price you actually received: pay an average of $10.06 on a market buy quoted at $10.02 and you slipped 4 cents a share, $40 on 1,000 shares. It is a real trading cost, as concrete as commissions and usually larger.Orders & ExecutionStop OrderA stop order sits dormant until price touches a trigger you set, then converts into a market order. A sell stop below the market is the classic stop-loss; a buy stop above the market is how breakout traders automate entries and how short sellers cap losses.Orders & ExecutionStop-Limit OrderA stop-limit order swaps the market order inside a plain stop for a limit order, capping how bad the exit price can get, at the cost of possibly not exiting at all. It carries two prices: the stop price that triggers it and the limit price that bounds the fill.Orders & ExecutionTrailing StopA trailing stop follows price at a fixed distance, say $0.50 or 3%, ratcheting the trigger up as the stock rises but never lowering it. It converts an open-ended winner into a position with a defined maximum giveback.Orders & Execution