Request to buy or sell a security or financial instrument in the cash or derivatives market
A complete order contains information on the investor, the security, the order volume, the type of order and price, the time limit and the exchange on which the order is to be executed. The investor places the order with a bank, a financial services provider, or an institution admitted to exchange trading.
There are two kinds of orders, limit orders and market orders. A limit order to buy must be executed at or below the limit price; a limit order to sell must be executed at or above the limit price. Market orders are to be executed at the best available price. In general, it is recommended that investors place limits on all orders (except for stocks contained in the DAX® index) to protect their assets from excessive price fluctuations.
A further type of order is the so-called stop order, which is executed as a market order when a stock price reaches a specified threshold. For example, an investor can limit losses during a price slide by placing a stop-loss order, which means that a stock is to be sold as soon as the price has fallen to a certain level. Conversely, a buy stop order is not to be executed until the price has risen to the designated level. The advantage of stop orders is that investors do not need to constantly monitor the price of their stocks.
