Order Placement Guidelines

Placing an order to buy or sell at close to where the current market is trading is called a “Market” order. THERE IS NO SPECIFIED PRICE FOR THE MARKET ORDER. Governed by the CFTC and exchange rules, Floor brokers are to give you the best possible service. However, you do not have control over the market. Because they have the highest priority levels, Market orders get filled first. When you place a market order, it should be executed within 2-3 minutes that the floor receives it.
Example: If gold is trading at 650.00. You place a BUY MARKET ORDER. Two minutes later, the market is trading at 645.00. Your order is executed and you are filled at 645.00. (see diagram 1.0)

Stop orders become market orders when a particular price level is reached. Stop orders are mainly used to protect against losses or close out profitable positions. Also can be used to initiate positions (However, this is rare.) If the market moves against you, your sell stops are hit. They become market orders and you offset your positions.
Example: You find a commodity, (lets say March “US DOLLAR INDEX” DHH) that you are looking to buy or sell. If the market is currently trading at 84.00, your place a Buy Stop Order at 87.00, and the order will then be executed. It can be filled AT or ABOVE 87.00. Buy Stop Orders must be placed ABOVE the current market price. On the other hand when placing a Sell Stop Order with your broker you would place it BELOW the current market price. For example you place a Sell Stop Order for DX at 82.00. When DX is AT or BELOW 82.00, your Sell Stop Order will be executed. (See diagram 1.5)
Why would I place a Buy Stop Order?

1. To protect a major loss in an open short position
2. To initiate a buy position (very rarely)

Why would I place a Sell Stop Order?

1. To protect a major loss in an open long position
2. To initiate a sell position (very rarely)

The use of stop loss orders may not protect profits or limit losses to the amount intended as certain market conditions make it difficult or impossible to execute such orders.

Limit orders are used for entering the market at a specified price. Buy limit orders are placed below where the market is trading. Sell limit orders are placed above where the market is trading. If the market never reaches the designated price, the Limit Orders cannot be filled.
In order to execute a Limit Order, the price of the market has to go THROUGH the limit price *LIMIT ORDERS do NOT have to be filled at the price of the order.* Buy Limit Orders are placed below and Sell Limit Orders are placed above the market.
Example: If gold is trading at 650.00. You want to enter a BUY LIMIT ORDER for gold at 600.00. If the market trades BELOW, 600.00, your Buy Limit Order will be executed. The exact opposite is true for a SELL LIMIT ORDER. You want to enter a SELL LIMIT ORDER for gold at 675.00. If the market trades ABOVE, 675.00, your Sell Limit Order will be executed. (see diagram 1.6)

Stop limit orders are used to trade within a certain price range. Stop Limit Orders have two prices – a stop and a limit. The worst price an order can be executed at is the limit level and the best price is the stop level. For protection in fast moving markets, Stop Limit Orders are sometimes used.
BUY STOP LIMIT ORDER: If gold is trading at 650.00. You want to enter a BUY STOP LIMIT ORDER for gold. The STOP PRICE for the buy order would be placed at 650.00; this is where your order becomes a market order. You place a STOP LIMIT price for the buy at 700.00. This price is the maximum your order can be filled at. Any Price ABOVE 700.00, your order cannot be filled, hence the limit. The difference between a STOP ORDER and a STOP LIMIT ORDER is STOP LIMIT ORDERS protect you against being filled at a price far away from the original price. (see diagram 1.7)
SELL STOP LIMIT ORDER: Gold is trading at 650.00. You want to enter a SELL STOP LIMIT ORDER for gold. The STOP PRICE for the sell would be placed at 625.00. this is where your order becomes a market order. You place a STOP LIMIT price for the sell at 600.00. This price is the minimum your order can be filled at. Any price BELOW 600.00, your order cannot be filled, hence the limit. (see diagram 1.7)
**STOP LIMIT ORDERS ARE NOT GUARANTEED TO BE FILLED.

If you need additional assistance, we would be more than happy to help you and explain further how to place orders correctly. We help traders daily, so if you have any order related question or a trading related question, please call our desk Toll Free @ 1.800.519.9085.