Order types

You decide the tactics, we execute them: Simply automate your order management. We explain here how you can implement trading strategies with only a single order.

Florian
Florian Trading

You don’t want to be permanently monitoring your custody account, but still want to be able to lock into rising or falling prices? Thanks to intelligent order types you can decide when, where and at what price your securities are automatically bought or sold – irrespective of whether equities, investment or leveraged products, ETFs or bonds are involved.

Trailing stop orders

For example, by using a trailing stop order. This can help to hedge your profits. Here, you peg the desired stop limit when placing the order to the price of the security at a time in the future you determine. Depending on the bank, you can state this time period as an absolute or a percentage value. If it rises, your stop limit is automatically adjusted. As a result, if the trend turns around you automatically take the profits earned so far. If the price falls, the limit valid at that point in time applies: If it is reached, then your security is sold at the next possible price.

In the opposite case of a buy order, a trailing stop offers you a better opportunity of an optimized entry price. In this way, you don’t have to spend all your time following the market and manually adjusting your stop limits. As with any stop-loss, however, the more volatile the security in question, the greater the time period you should choose.

Stop-limit orders

Stop-limit orders bear considering if, unlike with a stop-market order, you are not prepared to accept any possible sales price after the stop-loss point is reached. It works as follows: You enter not just the sell limit, but also a higher stop-loss limit. As soon as the latter is reached, your order with the selected sell limit is inputted into the order ledger. If a price is then determined that is greater or identical to the sell limit then your security gets sold. In this way you get the desired minimum sell price. Should this not be reached owing to prevailing market conditions, the security is not sold automatically and you continue to hold the investment.

If the order is to buy a particular security, the stop-limit order (which now is more of a start-buy order) gives you entry at a maximum price you have defined in advance.

One-cancels-other orders

One-cancels-other orders could equally be called 2-in-1 orders. They enable you to take a position on both falling and rising prices. To do so, you combine two orders, whereby the one is automatically deleted if the other is executed. Depending on what price benchmark is first met going forward, the security is sold at the corresponding price.

This works as follows: If a sell order is involved, you set not only a stop limit to hedge your position downwards, but at the same time an upper sell limit. In this way you either automatically take profits or you limit losses.

If you use the one-cancels-other order as a buy order, you can enter either at a price more favorable than the current price or as soon as the upper buy limit you have chosen is reached – because you expect that once that benchmark is reached the price will continue to climb. Here, the buy limit must be below or equal to the current market price and the stop-buy mark above it.

Next order

Using a next order you can link up to three orders in a chain: For example, you can combine a limited buy order directly with a sell order for the same security and for the same lot number. The subsequent order is only activated if the prior order has been executed in full. 
Incidentally, each part of the order chain can be changed independently of which order went first and which followed. However, if an order is cancelled, this leads automatically to all subsequent orders being cancelled, too.

Periodic validity

The order restriction for periodic validity enables you to define up to three validity periods a day during which your security order can be executed. This can be interesting as regards the main trading times for a particular equity, for it is during that period that the largest volume of them changes hands. This reduces the buy-sell spread. To lock into this fact you simply restrict your order’s validity, for example, to a period between 9 a.m. and 5:30 p.m. for a German equity or 3:30 and 10 p.m. for an equity listed in the US. This then applies automatically on each trading day until the order is executed or expires.

How and where you enter your preferred order type 

If you enter an order using the order screen provided by your online broker, all you need do is select Börse Stuttgart as your exchange and then click the desired type of order. Some service providers also list the relevant entries under “order restrictions”. Or you have your bank advisor place the order at Börse Stuttgart with the corresponding order restrictions.

Important: Not all financial institutes at present offer the intelligent order types available from Börse Stuttgart – so make sure you ask your bank when they will be able to provide this service for you.