There are many different types of stock orders. Some orders are simple and basic, others are complex. Often the same type of complex order is called different names by different brokers.

At Insight Stock Picks we generally use just 3 types of orders. The three types of orders are universally considered the three basic types of orders. If we ever use a type of order that is not on this list, it will be explained fully in our daily alert.
Our three basic order types are:

1. Market Orders
2. Limit Orders
3. Stop Orders

Market Orders:

Market orders instruct your broker to buy at whatever the current price is at the time the order is to be executed. This type of order is usually used when the trader is afraid the stock's price is about to move very quickly. The concern is that their order will not get filled if it is entered with a specific price. You are essentially saying fill me immediately at the best price you can get.

For example:

A company just released their earnings for the quarter and they were much better than most analysts expected. A trader wants to buy the stock before the stock's price soars.

The trader knows the price will rise rapidly and therefore knows that if he puts in an order with a specific price he could be entering too low of a price and may well miss getting filled. If he doesn't get filled he will have to cancel his original order and enter a new order at a higher price and hope the new order gets filled.

So instead of buying the stock at a specific price, the trader puts in an order to buy at the market, which means the trader's order gets filled at whatever price the stock is trading at when the trader's order reaches the market maker.

The advantage of market orders is that your order will almost always be filled. The disadvantage is that the price you end up paying may be considerably higher than you expected to pay.

Variation - Market on Open (MOO): This order is simply a market order that is executed at the price the stock trades upon the opening of the market.

For example on the NASDAQ, the order is withheld electronically until 9:30 am EST (The time the NASDAQ opens). At that time, the order is placed and will be filled the same way any market order placed at the opening would be filled.

There is no guarantee that a MOO order will be filled at the same price that the stock opens, but generally you will receive the opening price or a price very close to it.

Next Topic Types of Stock orders; Limit Order