This page is designed to help traders improve their understanding of order instructions. Traders new to futures may find trade instructions a little confusing if they’re not familiar with different order types and their abbreviations, or in other words “broker language”. This section provides a summary and explanation of typical orders futures traders use.
Orders Types
If you have traded shares before you’ll be aware there is much more to placing an order than just “buy” or “sell”.
In futures there are many order types and expressions used. Although the following order types can either be given to a Client Advisor or entered into an Internet Trading System, for the purpose of this explanation I’ll assume the order will be placed with a Client Advisor.
When placing orders it’s always a good practice to identify the contract month you wish to trade. Although the majority of futures trading is in the closest, or spot month, it’s worthwhile developing good habits by learning to place professional and accurate orders.
Although the futures universe is huge I’ll use the Australian index futures contract, or the “SPI” (Share Price Index 200), in the following examples. In addition I’ll assume the closest or spot month contract is “September” and when referring to an advisory service I’ll reference my daily index newsletter IndexALERT.
Straight Orders
MARKET
A MARKET order is used when you wish to enter the market immediately and you are not concerned about the price you receive. By using a MARKET order you are instructing your Client Advisor to transact immediately. If you’re looking to sell the SPI then your Client Advisor would hit the nearest “bid” price (the best buying price). Your order would look like this.
Sell 1 September SPI at MARKET.
BEST
A BEST order is just like the MARKET order however it allows your Client Advisor discretion in terms of time and price as they attempt to get you the BEST price. Your order would look like this.
Sell 1 September SPI at BEST.
LIMIT
A LIMIT order can be used when you have identified a specific price to trade at. Lets assume you would like to buy the SPI on a pull back from its current rally to 3555. Say 3545. Your order would look like this.
Buy 1 September SPI at 3545 LIMIT.
Your Client Advisor would buy you one SPI contract at 3545 or better.
STOP
A STOP order is a MARKET order once a trigger condition is meet. STOP orders are usually used to limit losses when trading and are referred to as STOP LOSSES.
For example lets say that IndexALERT is short the SPI at 3525 and it instructs me to exit if the SPI trades above 3565. If this was the case I would place the following order with my Client Advisor.
Buy 1 September SPI at 3565 on STOP.
If the SPI then continued rallying and traded at 3565 my Client Advisor would then buy me 1 SPI contract at MARKET. He will not be interested in the price he gets. His focus is to buy me 1 contract ASAP!
Alternatively Traders can use STOP orders to enter a position. You may have found a key level at 3570 and wish to go long, or buy the SPI, if that level is traded. If so your order would look like the following.
Buy 1 September SPI at 3570 on STOP.
STOP LIMIT
A STOP LIMIT order has two parts to it. The first part requires a condition to be triggered by the STOP instruction. The second part then places a LIMIT on the price that can be executed. Say if IndexALERT wishes to buy the SPI if it trades strongly and makes a new yearly high above, say 3600. If so you could place the following order.
Buy 1 September SPI at 3600 on STOP, LIMIT 3602.
What this means to your Client Advisor is that if the SPI trades up to 3600 you wish to buy 1 contract immediately, however you don’t wish to pay more than 3602. In most cases you would probably be filled at 3600, however if it’s a key level and the market is hit by huge order flows the SPI may skip right through 3600. So you are allowing your Client Advisor discretion to be able to pay up to 3602 and no more for your single SPI contract. The disadvantage of using a STOP LIMIT order is that after trading 3600 the SPI’s next price may be 3605 and up she goes leaving you right in your market view but without a position because you placed a LIMIT on your buy price.
MIT – MARKET IF TOUCHED
When trading it’s not always possible to be filled at a resting price due to thin volumes. When this occurs you may be correct in your analysis but not have a position. To avoid this situation you can use a MARKET IF TOUCHED order.
If your analysis suggests the SPI will hit heavy resistance at 3580 and that you wish to sell the SPI at that level and you have a strong preference to get short and not be worried about your price you can use the MARKET IF TOUCHED instruction. Your order would look like the following.
Sell 1 September SPI at 3580 MIT (MARKET IF TOUCHED).
Your Client Advisor will go to MARKET to get you short once the SPI trades 3580.
MOO – MARKET ON OPEN
A MARKET ON OPEN or MOO order is a two-part order. The order instructs your Client Advisor to transact your order at MARKET on the market’s OPEN. Lets say IndexALERT, following some positive news overnight from the US, wishes to enter the market on the buy side. It’s not interested in what price you have to pay, only that it wants you to be long the SPI as soon as the market opens as it expects a strong rally during the day. Your order would look like this.
Buy 1 September SPI at MOO (MARKET ON OPEN).
Your Client Advisor would look to buy you 1 SPI contract at MARKET once the SPI OPENED. Nice and easy.
MOC – MARKET ON CLOSE
This is just the opposite to the MOO order above.
The MARKET ON CLOSE order is also a two-part order. The order instructs your Client Advisor to transact your order at MARKET on the market’s CLOSE. Lets say IndexALERT is long the SPI but it’s a position it doesn’t wish to keep overnight as it’s nervous about some key data coming out of the US (like employment numbers). IndexALERT will be happy to remain long during the day but it wishes to exit on the day’s close. Your order would look like this.
Sell 1 September SPI at MOC (MARKET ON CLOSE).
Your Client Advisor would look to sell your 1 SPI contract at MARKET within the last minute of trading before the SPI closes at 4:30pm.
SCO – STOP CLOSE ONLY
A STOP CLOSE ONLY order is another two-part order. The first part of the order has a conditional level that will trigger the STOP instruction, while the second part says the STOP condition will ONLY be activated on the CLOSE. Lets say IndexALERT is long the SPI at 3550 and its analysis suggests the market needs a strong close to stay long, say a close at or above 3561. If the SPI closes at 3560 or lower than IndexALERT would not wish to remain long in the market. If this was the case your order would like this.
Sell 1 September SPI at 3560 on SCO (STOP CLOSE ONLY).
As the SPI approaches its close your Client Advisor would know that if the SPI looked like closing at 3560 or LOWER that they would have to exit your SPI position at MARKET on the CLOSE. Lets say during the last minute of trading the SPI is trading at 3555, since its below 3560 your Client Advisor would sell your 1 SPI contract at MARKET.
FOK – FILL OR KILL
A FILL OR KILL order is a LIMIT order that must be filled immediately or cancelled. Say you wished to sell the SPI if it has a weak opening below say 3550. If this were the case your order would look like this.
If the September SPI opens at 3549 or lower than please – Sell 1 September SPI at market on open FOK.
If the SPI opens at 3549 or lower than your order would be filled, however if the SPI opened at 3550 or higher than your order would be cancelled of “killed”.
FAK – FILL AND KILL
A FILL AND KILL is an order that is executed to the extent that it is possible and then the balance, if there is any, is cancelled. Let’s take the previous example but say we wanted to sell 5 SPI contracts on the open. Our order would look like this.
If the September SPI opens at 3549 or lower than please – Sell 5 September SPI at market on open FAK.
If the SPI opens at 3549 or lower, at say 3545, and only three contracts trade at the opening price before moving lower, then the balance of our order that was not filled on the 3545 open would be cancelled.
Conditional Orders
Conditional orders require an event to take place before an order is triggered. These order types are common.
EXPANSION ORDER
Lets say IndexALERT wishes to sell the SPI if it opens and starts falling away by say 10 points. IndexALERT does not wish to sell the SPI immediately it opens as it thinks there may be a small chance it could rally. So IndexALERT believes if the SPI was able to fall by 10 points you it would wish to sell it. If so your order would like this.
Sell 1 September SPI at OPEN – 10 on STOP.
Your Client Advisor would watch the SPI and after opening it dropped by 10 points they would sell you 1 SPI contract at MARKET.
IF DONE
An IF DONE instruction is conditional upon a previous instruction being triggered.
Lets use the previous example. If the above order was filled IndexALERT may wish to place a STOP to protect itself in case it was wrong. So IndexALERT may believe that if it went short it would be happy to remain short even if the SPI rallied above the sell level, however it would not be happy if the SPI rallied 20 points against the position.
So if IndexALERT wanted to sell the SPI if it fell 10 points after opening with a 20 point stop loss protection you would forward the following order to your Client Advisor.
Sell 1 September SPI at OPEN – 10 on STOP.
IF DONE
Buy 1 September SPI at OPEN + 10 on STOP.
The “IF DONE” condition will only become active after the SPI fell 10 points. If it did your Client Advisor would then look to buy back your short position at market if the SPI than rallied and traded 10 points above the days opening.
OCO – ONE CANCELS OTHER
A ONE CANCELS (the) OTHER or OCO order allows a Trader to place two orders together where their Client Advisor will only execute the order whose condition is triggered first.
Lets look at an example.
Say IndexALERT sees two interesting but conflicting scenarios.
IndexALERT may believe that if the SPI opens low it will fall away immediately. Alternatively, IndexALERT can see that if the SPI is able to open strongly and then rally 10 points that it could be a large range day to the upside. It just depends on the SPI’s opening.
Now what to do? IndexALERT knows the key opening levels for the SPI and it doesn’t wish to miss either trading opportunity. Well what you can do is place a ONE CANCELS OTHER order.
Lets say a weak opening in IndexALERT’s analysis is 3520 while a strong opening would be 3530. You could place the following conditional orders.
IF the Sept SPI opens at 3520 or lower could you please work the following order.
Sell 1 September SPI at MARKET.
OCO (ONE CANCELS OTHER)
IF the Sept SPI opens at 3530 could you please work the following order.
Buy 1 September SPI at OPEN + 10 on STOP.
Using the ONE CANCELS OTHER or OCO condition allows Traders to place multiple orders.
Another example may involve IndexALERT being long the SPI and it would like your Client Advisor to work both a Profit Target and a STOP LOSS.
Lets say IndexALERT is long the SPI at 3550 and it’s happy to take profits if the SPI can rally to 3580 while it would want to be stopped out at 3540. If so your order would like the following.
Sell 1 Sept SPI at 3580.
OCO (ONE CANCELS OTHER)
Sell 1 Sept SPI at 3540 on STOP.
Your Client Advisor would only execute the order whose condition is triggered first. Once that happens the other side of the order is CANCELLED.
Duration of Orders
DAY ONLY
Unless you give instructions to the contrary all futures orders are DAY ONLY orders. If the order is not filled or executed by the end of day the order expires. IndexALERT’s orders are DAY ONLY orders.
GAM – GOOD ALL MARKETS
If you wish to place an entry or stop order for both the day and evening SPI sessions you can instruct your Client Advisor by using a GOOD ALL MARKETS instruction.
Lets say you would like to sell the SPI at 3580 regardless of whether it occurs during today or the evening’s SPI session. If this was the case you would place the following order.
Sell 1 September SPI at 3580 LIMIT GAM (GOOD ALL MARKETS).
If you weren’t executed during the day session your Client Advisor would carry your order through to the evening session.
GTC – GOOD TILL CANCELLED
A GOOD TILL CANCELLED order is one that stays working or alive until it is either filled or cancelled by yourself.
You may be working a STOP loss order that you would prefer not to have to place each day with your Client Advisor so you could use the GOOD TILL CANCELLED instruction. If you’re long and have a stop to exit the position at 3500 you would place the following order.
Sell 1 September SPI at 3500 on STOP GTC (GOOD TILL CANCELLED).
Your Client Advisor would work this order until either you were exited at 3500 or you cancelled the order.
Complete Orders
When placing an entry order, either to purchase or sell the SPI it is good practice to always place a STOP LOSS order at the same time, following an IF DONE condition.
IndexALERT always instructs you to place a STOP LOSS order instruction.
For example if you are looking to buy a dip in the SPI at 3500 and you wish to only risk 20 points then your order would look like the following.
Buy 1 September SPI at 3500 MIT (MARKET IF TOUCH).
IF DONE
Sell 1 September SPI at 3480 on STOP.
Your Client Advisor will look to buy the SPI at MARKET once 3500 trades. Once you’ve entered your Client Advisor will automatically look to sell your 1 SPI at MARKET if 3480 then trades. You can rest at peace knowing you have your protection in place.
In addition if you know your profit level you can also include it along with your ENTRY and STOP LOSS instructions.
Pop Quiz – Order Instructions
Lets take a look at a few IndexALERT SPI orders and see whether we can decipher their instructions.
Order
Sell 1 Sept SPI Open – 15 on STOP.
IF DONE,
Buy 1 Sept SPI at Open + 15 on STOP OCO Buy MOC.
Instruction
A Client Advisor will sell 1 SPI contract at MARKET if after opening the SPI falls 15 points. If the instruction is executed the Client Advisor will then look to work a STOP LOSS order buying 1 SPI at MARKET if the SPI then traded 15 points above the days opening. If during the last minute of trading the position is still short and not stopped out, the Client Advisor will look to exit the SPI position at MARKET on the CLOSE (MOC).
This order is a day trade order where the Trader wants to sell a 15 point drop, work a 30 point stop (15 + 15) and then exit on the CLOSE if they were not stopped out earlier.
Order
Buy 1 Sept SPI at Open + 20 on STOP.
IF DONE,
Sell 1 Sept SPI at Open – 10 on Stop OCO Sell 1 Sept SPI at Open + 40 on SCO.
Instruction
A Client Advisor will buy 1 SPI contract at MARKET if after opening the SPI can rally 20 points. If the instruction is executed the Client Advisor will then look to work a STOP LOSS order selling 1 SPI at MARKET if the SPI then trades 10 points below the days opening. If during the last minute of trading the position is still long and not stopped out, the Client Advisor would look to exit the SPI position at MARKET on the CLOSE if the SPI is trading at equal to or less than the Open plus 40 (SCO – STOP CLOSE ONLY.
This instruction is a position order where the Trader is willing to risk 30 points (20 + 10) on the trade. If during the last minute of trading the position has not been stopped out the Client Advisor will look to sell 1 SPI at MARKET if the SPI is trading at equal to or less than the Open plus 40 points. Basically the Trader wants the SPI to have a strong close to remain long by closing above their buy level (Open + 20 points).
Order
If the Sept SPI opens between 3525 and 3540 INCLUSIVE, then;
Sell 1 Sept SPI at 3522 on Stop.
IF DONE
Buy 1 Sept SPI at the INTRA DAY HIGH at time of entry less 35 points.
OCO
Buy 1 Sept SPI at the INTRA DAY HIGH at time of entry on Stop OCO MOC.
Instruction
A Client Advisor will watch the SPI’s opening and if the SPI opens at 3525 or higher, but equal to or less than 3540, then they will begin monitoring the SPI to see whether the sell condition is triggered. If having opened within the conditions the SPI then falls away and trades at 3522 the Client Advisor will then sell 1 SPI at MARKET.
Having sold 1 SPI the Client Advisor would then work two orders. A Profit target and a STOP order. The Profit Target would be calculated by subtracting 35 points off the SPI’s intra day high at time of entry (at 3522). The STOP LOSS level would be the SPI’s intra day high at time of entry. The Client Advisor will only execute the order that occurs first, either the Profit Target below the sell price, or the STOP LOSS at the SPI’s intra day high.
Now if with one minute of trading left the short position has not reached its Profit Target or been stopped out at the intra day high the Client Advisor will exit at MARKET on the CLOSE.
This is a day trade sell order with a combined Profit Target and Stop instruction (which in turn has two levels, a price stop at the intra day high and a time stop at the market’s close).
Order
Buy 1 Sept SPI at Open + 10 on STOP.
IF DONE,
Sell 1 Sept SPI at Open – 10 on STOP GAM.
Instruction
A Client Advisor will buy 1 SPI contract at MARKET if after opening the SPI can rally 10 points. If the instruction is executed the Client Advisor will then look to work a STOP LOSS order selling 1 SPI at MARKET if the SPI then traded 10 points below the days opening. If at the end of trading at 4:30pm the position is still long and not stopped out the Client Advisor will then work the STOP LOSS order to sell 1 SPI at Open less 10 points during the overnight evening session as the STOP LOSS order had a GAM (GOOD ALL MARKETS) instruction. Remember GOOD ALL MARKETS refers to both the Day and Night session.
Order
Buy 1 Sept SPI at 3500 LIMIT GAM GTC
IF DONE,
Sell 1 Sept SPI at 3450 on STOP GAM GTC
Instruction
A Client Advisor will look to buy 1 SPI contract at 3500 LIMIT during both the Day and Evening sessions (GAM – GOOD ALL MARKETS) until either the order is filled or the instruction is cancelled by the Trader (GTC – GOOD TILL CANCELLED).
If the order is filled at 3500 the Client Advisor will then work a STOP LOSS order selling 1 SPI at MARKET if 3450 is traded and they will work the order during both the Day and Evening session (GAM – GOOD ALL MARKETS) until either it is filled or is cancelled by the TRADER (GTC – GOOD TO CANCELLED).