Validity Instructions

Apuntes

Validity Instructions Validity instructions specify when an order should be executed. Most orders are day orders, meaning they expire if unilled by the end of the trading day. Good til canceled orders last until they are illed. Immediate-or-cancel orders are canceled unless they can be illed immediately. They are also known as ill-or-kill orders. Good-on-close orders are only illed at the end of the trading day. If they are market orders, they are referred to as market-on-close orders. These are often used by mutual funds because their portfolios are valued using closing prices. There are also good-on-open orders. Stop orders are those that are not executed unless the stop price has been met. They are often referred to as stop loss orders because they can be used to prevent losses or to protect proits. Suppose an investor purchases a stock for $50. If the investor wants to sell out of the position if the price falls 10% to $45, he can enter a stop-sell order at $45. If the stock trades down to $45 or lower, this triggers a market order to sell. There is no guarantee that the order will execute at $45, and a rapidly falling stock could be sold at a price signiicantly lower than $45....