Exchange Main types of orders. Clear explanations from the AMF.

Looking to buy or sell shares, exchange-traded funds or other securities without the help of a specialist? Below is a brief guide that explains the main types of orders used to conduct transactions.

Market order

A market order is an order to buy or sell that is executed immediately, at the best available price. In other words:

  • You have a guarantee that the number of securities you wish to trade will be bought or sold
  • But not necessarily at the price (or market priceThe market price is the most recent price at which a security (e.g., shares, bonds, etc.) was bought or sold.) that you want.

This type of order is not always to your advantage.

For example, let’s say you want to buy 2,000 preferred shares of ABC Co. The market price is $19. There is only one lot available at that price, however. You want to buy 20 lotsWith respect to trading securities, a lot is a group of shares that is bought or sold together.. A market order will give you the 100 shares at $19. The other lots could be at a higher price, such as 2 lots at $19.50, 4 lots at $20, 10 lots at $20.50 and 10 lots at $23. Placing a market order may not be worth your while, because you would pay too much (up to $23 whereas the current market price is $19).

Limit order

This is an order through which you indicate the maximum price at which you’re prepared to buy or sell shares. A limit order allows you to control the price of the transaction. However, the transaction may not be filled.

For example, a security’s market price is $10. Your maximum price for buying it is $9.90. If the security’s price drops to $9.90 and there are enough lots available at this price, your transaction will go through. However, if its market price doesn’t go down enough or if it goes up, your order won’t go through.

Stop order

A stop order is an order to sell that is only executed if the security’s price drops below the price you set (this is called the trigger priceOn an exchange, a trigger price is the price at which a stop limit order is executed. The transaction takes place only when the specified price is reached. ).

A stop order can be used to:

  • Limit your losses if the price of a security falls sharply
  • Protect your gains

For example, let’s say you bought shares at $15. Its value is now $30. Let’s say that you place a stop order at $28:

  • If the security drops below $28: The security is sold, but you protect a good part of your gains.
  • If the security does not drop below $28: You keep the security.

Stop-limit order

This is an order that is only executed if:

  • The security’s price drops below the trigger priceOn an exchange, a trigger price is the price at which a stop limit order is executed. The transaction takes place only when the specified price is reached.  you set.
  • AND its price isn’t lower than the minimum price you’ve decided on. 

For example, you place a stop-limit order to sell 100 shares of ABC Co. You indicate that the trigger price is $20 and the limit price is $19.50. Your order will be executed if the share price drops below $20 and the 100 shares can be sold between $19.50 and $20.

Note: If the price falls too quickly and the 100 shares can’t be sold between $19.50 and $20, the order won’t be executed.

Dark order

This is an order that is not publicly disclosed. This type of order is especially useful for investors who need to sell very large volumes of securities. Let’s say that a mutual fund manager wants to sell two million shares of ABC Co. If the order was visible, it could influence the market downward. The manager might then have trouble selling his shares for his target price.

All or none order

This is an order that is only executed if the total number of securities indicated in the buy or sell order can be traded. For example, if you issue an all or none order to buy 2,000 shares at $21, the order will only be executed if there are 2,000 shares offered at that price.

Odd lot order

A round lotWith respect to trading securities, an odd lot is a lot with a standard number of shares. The definition of a round lot can vary based on the price of the security or the exchange. usually consists of 100 shares for stock. However, this number may differ according to the type of security and the exchange where the securities are traded. In general, you can trade odd lots. Note that round lot orders have priority.

For example:

  • If you want to buy 50 shares of ABC Co. at $19, investors who place buy orders for round lots of 100 shares at the same price will have their trade executed before yours.
  • If there aren’t enough lots available, your order won’t be executed.

Short sale order

With a short sale order, you sell a security that you don’t own. The transaction is executed as follows:

  1. 1. Borrow the security from your dealer.
  2. 2. Sell the security.
  3. 3. Hope that the security drops in value.
  4. 4. Buy back the security at a lower price.
  5. 5. Give the security back to your dealer.
  6. 6. Pocket the profit!

It’s quite easy to do. Simply place an order on a security you don’t own, then select the “short sale” box on the transaction website. If the price of the security drops as expected, you can buy it back by selecting a box to indicate that you’re closing a short sale.


You believe that the share price of ABC Co. will drop sharply in the near future. It currently trades at $20. You don’t have any shares in this company. You borrow shares and sell them, specifying that this is a short sale. A few days later, the share trades at $19 on the exchange. You buy them back, specifying that you’re closing a short sale. You pocket a profit of $1 per share.

This type of transaction is very risky and isn’t suitable for all investors. If the share price goes up, you may have to buy back the shares at a higher price than expected. The consequences are that you’ll have to assume a loss by paying the difference.

Also, until you return the securities to your dealer, you’ll have to pay him any dividends paid out to shareholders. Since your dealer is no longer the one holding the security, he isn’t collecting the related dividends. You aren’t collecting the dividends either, because you sold the security while waiting for its price to go down.