What are common order types?

 

Market order

An order to buy or sell an ETF at the best available price. Since market orders are usually executed immediately, the price at which they are executed is not guaranteed. With market orders, the priorities are speed and execution, not price.

 

Limit order

An order to buy or sell an ETF at a specified price or better to help ensure that an investor does not pay more or receive less than a predetermined price when buying or selling a stock.

  • A buy limit order can only be executed at the limit price or lower.
  • A sell limit order can only be executed at the limit price or higher.
  • Limit orders are not guaranteed to fully execute and can become part of the publicly displayed quotes for an ETF.
 

Stop order

A stop order, also referred to as a stop-loss order, is an order to buy or sell a stock once the price of the stock reaches a specified price, known as the stop price. When the stop price is reached, a stop order becomes a market order. A buy stop order is entered at a stop price above the current market price. Investors generally use a buy stop order to limit a loss or to protect a profit on a stock that they have sold short. A sell stop order is entered at a stop price below the current market price. Investors generally use a sell stop order to limit a loss or to protect a profit on a stock that they own.

Some use the terms stop order and stop-loss order interchangeably, when actually there is no such thing as a stop-loss order since such an order does not protect you from losses as a result of poor execution.

 

Stop-limit order

A stop-limit order is an order to buy or sell a stock that combines the features of a stop order and a limit order. Once the stop price is reached, a stop-limit order becomes a limit order that will be executed at a specified price (or better). The benefit of a stop-limit order is that the investor can control the price at which the order can be executed.

Don't overlook your block desk

When trading large blocks of ETFs you have a lot to lose if your trading decisions are poorly executed. That's why it's important to utilize all the tools available. Your block desk can be indispensable in helping you get the best execution for your clients.

Block-desk traders can handle your trades efficiently and have the ability to source sufficient liquidity by using a variety of trading strategies.

Think of your block desk as an essential trading resource that can save you time and help ensure better trade execution.

 

All investing is subject to risk, including possible loss of principal.

Vanguard ETF Shares are not redeemable with the issuing Fund other than in very large aggregations worth millions of dollars. Instead, investors must buy and sell Vanguard ETF Shares in the secondary market and hold those shares in a brokerage account. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling.

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