What does order placement involve?
Order placement is the instruction you give to a trading venue or broker to buy or sell a security. Among other things, you specify the quantity, the price and the order type, for example a market order or a limit order.
When the order is received, it is placed in the order book and matched against other buy or sell orders. In listed trading this usually happens automatically, while order placement in unlisted trades is often more manual and relies on dialogue, agreements and documentation.
How order placement works
Order placement means giving an instruction to buy or sell a security. You specify the order type, price level and quantity, which governs how the trade is to be carried out.
- • An instruction to buy or sell
- • Choice of order type and price level
- • Affected by liquidity and market conditions
- • Can be automatic or manual
- • The first step in a securities trade
The choice of order type affects both the outcome and the risk of the trade, especially in markets with low liquidity.
When placing an order
Worth bearing in mind
When you place an order, it is important to understand which order type you are using and how it affects the price you get. Some order types give a quick trade but less control over the price, while others give more control but can take longer to complete. It is therefore wise to adapt your order placement to market conditions and your strategy.
In unlisted trading, order placement is often more manual. The process can take place through brokers, platforms or directly between parties, and the price can vary from trade to trade. Clear terms, written agreements and correct updating of the share register are crucial for the trade to be valid and secure.
Frequently asked questions
What is the difference between a market order and a limit order?
A market order is executed immediately at the best available price. A limit order is executed only if the price reaches the level you have specified.
Can an order be partly filled?
Yes. If there is not enough volume at the specified price, the order may only be partly executed.
How does order placement work in unlisted companies?
It is done manually through agreements or intermediaries, and the price is set through negotiation, not by a continuous market.
Is my order binding?
Yes. Once you have placed the order, it is binding under the broker's or platform's rules until it is executed or cancelled.
Can I withdraw an order I have placed?
You can often cancel it before it has been executed, but this depends on the trading system's rules and the order type.