Benefits of using Order Types
- Allows you to take control of your trading without having to monitor the markets night and day
- Easy to set up automated trading strategies
What are Order types?
Order types let you control the price you want to buy or sell your holdings at. By setting them up you’re stating the circumstances under which you want to trade. Once those circumstances occur (for example, the stock you’re interested in reaches the price you want to buy it at) your trade will happen automatically.
Setting up order types means you can make the most of the rise and fall of share prices without having to monitor the markets day and night. It’s easy to set up your order type instructions online or by phone. Once you've done that, we'll take care of the rest until your order is dealt, it expires or you amend or cancel it.
How much does it cost?
With our trading service it’s free to set up order types.
You can set up as many order types as you want, for every trade (some services will charge you to amend or even set up order types).
By setting up order types we can help you manage your exposure to the markets, whatever your circumstances, and wherever you are.
What are the different order types?
There are several different order types to choose from. They’ve all been designed to make trading shares as simple and flexible as possible. You can choose between the following:
- Limit order
- Rising buy
- Stop loss order
- Target Setting
- Range Trading
These different order types are explained in detail below. Alternatively when you come to trade, click on the help buttons next to the different order types for a full explanation/
How do I place an order?
When you come to trade you’ll be asked which order type you want to use to buy your shares. Simply select the order type you want and fill in any further information required.
How do I keep track of my orders?
Within your account, click on the Orders tab.
Here, you’ll find a record of all your order types. You can also cancel order types if you no longer want them.
As soon as an order type is executed, you’ll receive a message in secure message box.
When will the order be executed?
If you have set an order, we will execute this as soon as is practical if the price has been achieved. You can set a time limit of 30, 60 or 90 days or choose a specific date for your order to stop.
Order types explained
Limit orders allow you to buy or sell a share at your limit price or better.
You can place a Buy Limit order to buy shares at a lower price than they are currently. You can place a Sell Limit order to sell shares you already own for a higher price than they are currently.
Two very important points to note about limit orders:
- Our limit price facility does not guarantee your limit target price. When the share price reaches your limit price, your order is triggered and will be actioned in 'fair and due turn'. This means that the share is dealt as soon as possible at your limit price, or better. Occasionally the price may move detrimentally and this means your order may not be dealt. In this instance, your order will be placed back to 'pending' until the price is triggered once more, or your order expires or you choose to cancel.
- Your order can be for a specific number of shares, or a value of shares. We'll work out how many shares to buy or sell based on the limit price you set, taking into account the charges and stamp duty, where applicable. You can also set an expiry date for any working day in the future, up to 90 days.
A Rising Buy order lets you place a buy limit at a specified price. The order will be triggered if the share price rises above this limit.
You set both a lower price limit (the price you want to buy at) and an upper price limit (the maximum price you’re prepared to pay) for a Rising Buy order.
If the stock rises above both the upper and lower limits, the rising buy order won’t trigger. (This is to protect you from buying the stock at a higher level than you would want in a very fast moving market.)
Optional: This limit order type can be useful if you are trading in fast-moving shares – or to see if a particular share is going to break through a trend-line, or out of a trading range.
Stop Loss Order
A Stop Loss order is designed to protect profits and minimise losses for a stock you already own. You set both an upper (the price you want to sell at) and a lower (the minimum price you are prepared to sell at) price limit for a Stop Loss order.
If a stock falls below the upper limit, but stays over the lower limit, the stop loss order executes.
Stop Loss orders are executed on a best-endeavours basis, subject to market conditions.
- Two very important notes about Stop Losses:
Our Stop Loss price facility does not guarantee your Stop Loss price. When the share price reaches your Stop price, your order is triggered and will be actioned in 'fair and due turn'. This means that the share is dealt as soon as possible at the best price that can be obtained after the trigger price is hit. Occasionally this may mean that the price obtained is higher or lower than that requested one, depending on market conditions at the time. At times of high share price volatility this may be substantially different from your stop price.
- Our stop loss facility does not guarantee your stop loss target price. The price dealt at may be higher or lower than your trigger price. Please note that in some circumstances, a share price may fall suddenly, such as when a share goes ex-dividend or when an overnight news announcement means the price opens substantially lower than its previous closing price. As an example, if you hold a share trading at £5.00 with a stop loss of £4.80 and an overnight announcement means the shares open and begin trading at £4.00 your stop loss will be triggered and dealt at the best price available at the time of trading. In this example we would trade at £4.00 NOT £4.80.
A Target Set order can be set for an existing share holding. It is a combination of: a Limit order to sell at a higher price, and a Stop Loss order to sell at a price lower than the current price.
So, if the current sell price for your shares was 450p you could set a Limit order to sell them at a limit price of 455p, with a Stop Loss order at 447p. If the price began to rise, your limit order would attempt to execute at 455p, but if it began to fall your stop loss would protect you, by attempting to sell your shares at 447p.
Use Range Trading to specify the prices you want to buy and sell a particular stock at, without needing to constantly watch share prices.
Range Trading is a combination of two Limit orders: one to buy shares at a lower price than the current price, and one to sell them at a higher price.
So, you could set up a limit order to run for the next six months, so every time XYZ plc shares hit 800p, you buy a specific number of them. Every time they reach 900p you sell them. Note, the Sell Limit would only become active once the Buy Limit has triggered.
- We do not offer a guaranteed price function which means that the price you request for a limit or stop loss order may not be the price you receive. When the share price reaches your target price, your order is triggered and will be actioned in 'fair and due turn'. This means that the share is dealt as soon as possible at the best price that can be obtained after the trigger price is hit. In addition market volatility can substantially influence the price we achieve for your order.
- It is not always possible to execute an order type at your specified price. This can depend on the variables of the instruction. For example, if a share price is particularly volatile, or your order is greater than the amount available at that price, we may be unable to complete your instruction.
- If you want to set up an Order Type on your Interactive Investor Investment , ISA or SIPP account or through regular investing, you need to have sufficient funds to cover the cost of any purchases before you set up the order type. If you have insufficient funds your order type may be cancelled.
- If you don’t have an Interactive Investor Trading Account attached to your Interactive Investor Investment Account, the main order type service won’t be available to you and you will only be able to place limit orders, which are valid for one business day.
- Order Types can be placed on eligible UK quoted equities only so overseas stocks and funds are not covered.