Different Types of Orders in Commodities Trade
“MIT stands for ‘Market If Touched’. As the name suggests it means that your order would be materialized when a certain price limit is reached. ”
The commodities and the share market are showing definitive signs of gradual improvement. You better be thinking about investing in some or the other commodities.
For this purpose some fundamental information about the way commodities behave would come in handy. Let’s discuss the different types of orders that may be utilized to enter the commodities trade.
First come the ‘Market Orders’. This is the most common order type and in this you enter the commodities trade at the existing prices by placing market orders with a broker.
However, only the existing prices are dealt with and may not be the best fit for you. The advantage is that this method is speedy and comes in a number of varieties to tackle the uncertainties of the stock market.
For example we have the MIT variant of the market orders. MIT stands for ‘Market If Touched’. As the name suggests it means that your order would be materialized when a certain price limit is reached. Nevertheless, the order will be eventually filled even if the price pointer moves away from he stipulated price demarcation.
Then we have the ‘Limit Market Orders’. It means that a price limit is set and your order is materialized ‘only’ when the price reaches that limit or in other cases remains below it. It is different from the MIT because in limit orders the limit is strictly adhered to.
These are generally of two types. Buy Limit Orders and Sell Limit Orders. These correspond to the limit-set filling of the order in case of buying and selling respectively.
There are certain mixed varieties of market orders too like the Stop Limit Order. It has two price limits set on them. The first is the regular stop order price and the second one is limit price. As and when the stop price is attained the limit price gets automatically cancelled.
Another variant is the “Stop Close Order’. As is indicative of the name, these orders become functional only towards the end of a particular business day. If the market price is such that it is quite close to the stop price towards the end of the day, stop close order becomes the preferred order.
Author - DeeKay
Tags - Finance, Economy
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