Definition of Open Order§
An Open Order is a buy or sell order that has not yet been executed and remains in effect until certain specified conditions have been met, the order is canceled by the customer, or the order expires. This provides traders with the flexibility to leave an order active in the market while waiting for its conditions to be fulfilled.
| Open Order | Market Order |
|---|---|
| Remains active until conditions are met | Filled immediately at current market price |
| Can be conditional (e.g., limit price) | No conditions, executed at market price |
| May be canceled by the trader | Cannot be canceled once placed |
| Commonly used for price-sensitive trading | Preferred for immediate transactions |
Examples of Open Orders§
-
Limit Order: A trader places an order to buy 100 shares of a stock at $25. This order remains open until the stock price hits $25 or the trader cancels it.
-
Stop Order: A trader might place a stop order to sell a stock if it drops below a certain price. This order will only activate when the condition is met.
Related Terms§
- Limit Order: An order to buy or sell a security at a specified price or better.
- Market Order: An order to buy or sell a security at the best available current price, typically executed instantly.
- Stop Order: An order to buy or sell once a specified price is reached, converting to a market order once triggered.
Formula & Diagrams§
Humorous Quotations & Fun Facts§
-
“The stock market is filled with individuals who know the price of everything, but the value of nothing.” – Philip Fisher. An open order is like waiting for that valuable stock to show up before you decline a dinner invitation!
-
Fun Fact: Did you know? The first stock exchange wasn’t established until 1602 in Amsterdam! Talk about waiting for an open order, they had to wait for ships!
Frequently Asked Questions (FAQs)§
Q1: How long can my open order remain active?
A1: Open orders can remain active until they are fulfilled, cancelled, or they reach their expiration date—if applicable, so feel free to take a nap while waiting!
Q2: Can I modify an open order?
A2: Yes, most platforms allow you to modify or adjust the conditions of your open orders. Just imagine you’re a chef adjusting a recipe until it’s just right!
Q3: What happens to an open order on the expiration date?
A3: If the conditions of an open order are not met before the expiration date, the order will automatically cancel! Think of it as your order getting tired and deciding to take a permanent snooze.
Further Reading and Resources§
- Investopedia: Understanding Order Types
- “The Intelligent Investor” by Benjamin Graham
- “A Random Walk Down Wall Street” by Burton Malkiel
Test Your Knowledge: Open Order Quiz Time!§
Thank you for learning about open orders! May your trading strategy always be as clear as your coffee and as flexible as an acrobat!
