So far, we have covered four basic types of stock market orders.

Here's a summary of each of the different types of orders:

Let's not forget about the different time frames.

Most people will want to use two, or possibly three types of orders.

A day order is just that.  It is an order that is in effect till the end of the current trading day.  This means that if your order is not filled by the end of the day, it is cancelled.  If you place a day order prior to the trading day's start, then it is typically in effect when the new trading day starts - this is something you want to be sure you check with your broker.

A Good-Till-Cancel order is an order that either (1) is filled, (2) is cancelled by you, or (3) expires within a certain time frame if not executed, typically sixty days.

A third type of order that relates to time, is a Fill-Or-Kill order.  This order specifies that the order be executed immediately or is canceled.  Again this is something that you want to understand from your broker's perspective.

Day orders are typically used to enter a position while good-till-cancel orders are used for exiting when you want to let the market take your position away at either a predetermined profit target, or if the stock gives back gains, or if your position is a losing one. 

Then there is the "bid" and "ask".

The bid is the price that someone is willing to pay for the stock you are selling.  The ask is the price that someone is willing to sell to you the stock that you are interested in buying.

Here's what the bid and ask look for MSFT recently:

The bid/ask spread is simply the difference between those two prices.  Typically the asking price will be higher than the bidding price.  Sometimes in fast market conditions, the specialist or market maker's quotes will not keep up with what is actually happening.  In that case, the ask might appear lower than the bid.  And sometimes you might just get lucky and pay less than the bid for a stock you are interested in owning (just don't count on it).

Let's do a quick check.

Here's where it all comes together.

Understand that by using the best orders for the situation at hand, you are putting the odds of success in your own hands.

Using a stop-limit day order to enter a position typically gets you into a position at just the right time without overpaying.

Using a good-till-cancel stop order as a protective stop order is good for preventing large losses.

Using a limit order to exit a partial position locks in some gains.

These are the exact type of orders we use for our Stock Rocket Trading system for precise buying and selling.

Just to make sure you understand these concepts, check you knowledge by taking the short quiz below.

Select the description that best describes what this order is.