Market-With-Protection Order

AAA

DEFINITION of 'Market-With-Protection Order'

A type of market order that is canceled and re-submitted as a limit order if the price of the asset moves dramatically after the investor places the order. The limit on the limit order is placed at around the current market price as determined by a broker. This type of order adds a protective measure, helping the investor ensure his or her market order will not be completed at a price that is far off from the market price at the time of the order.

INVESTOPEDIA EXPLAINS 'Market-With-Protection Order'

For example, say you place a market-with-protection order to sell 1,000 shares at the current market price of $45. If half of the order is filled at this price but the price of the shares start to fall rapidly to $35, the original market order is canceled and a limit order is placed for the remaining shares at $40. If the price climbs back to $40, the rest of the shares will be sold. If there was no protection on the order, the shares may have been sold at $35, which is far off from the market price of $45 that the investor originally wanted.

RELATED TERMS
  1. Limit Order

    An order placed with a brokerage to buy or sell a set number ...
  2. Stop-Limit Order

    An order placed with a broker that combines the features of stop ...
  3. Order

    An investor's instructions to a broker or brokerage firm to purchase ...
  4. Stop Order

    An order to buy or sell a security when its price surpasses a ...
  5. Market Order

    An order that an investor makes through a broker or brokerage ...
  6. Broker

    1. An individual or firm that charges a fee or commission for ...
RELATED FAQS
  1. What are some ways to reduce downside risk when holding a long position?

    A trader seeking to minimize his downside risk in an existing long position can do a number of things to protect a portion ... Read Full Answer >>
  2. How do I determine where to set my stop loss?

    Determining stop-loss order placement is all about targeting an allowable risk threshold. This price should be strategically ... Read Full Answer >>
  3. What types of investors are best-suited for stop loss orders?

    From conservative investors to highly speculative day traders, no one likes to see a loss in a portfolio. There are several ... Read Full Answer >>
  4. What are the advantages of a limit order over a market order?

    The primary advantage of a limit order over a market order is that the limit order guarantees market entry at the trader's ... Read Full Answer >>
  5. Why is the execution of a limit order not guaranteed?

    A limit order is a great way to purchase a stock at a predetermined price point without needing to watch the price all the ... Read Full Answer >>
  6. Why do limit orders cost more than market orders?

    Two common ways to trade stock are market orders and limit orders. A market order is the simplest type of stock trade; it ... Read Full Answer >>
Related Articles
  1. Investing Basics

    Understanding Order Execution

    Find out the various ways in which a broker can fill an order, which can affect costs.
  2. Active Trading Fundamentals

    The Basics Of Trading A Stock

    Taking control of your portfolio means knowing what orders to use when buying or selling stocks.
  3. Investing

    The Art Of Selling A Losing Position

    Knowing whether to sell or to hold is tough. And no rule fits all. Find out what to consider.
  4. Active Trading Fundamentals

    The Stop-Loss Order - Make Sure You Use It

    It's a simple but powerful tool to help you implement your stock-investment strategy. Find out how.
  5. Trading Strategies

    Making The Trade: Understand Order Types

    Buying and selling stock can be a lot like buying or selling a car. Traders should use and understand tools such as market orders, limit orders, day orders, and good-'til-canceled orders to ensure ...
  6. Trading Strategies

    Patience Is A Trader's Virtue

    Waiting may be the biggest key to reeling in that trophy investment.
  7. Investing Basics

    Narrow Your Range With Stop-Limit Orders

    With stop-limit orders, buyers protect themselves from prices too high for their tastes.
  8. Trading Strategies

    How to Use Trailing Stops

    A trailing stop is an order to buy or sell a security if it moves in an unfavorable direction.
  9. Active Trading

    Pinpoint Winning Trade Entries With Filters And Triggers

    These tools will help you enter at high-probability points and ensure you trade within your set strategy.
  10. Active Trading Fundamentals

    Trailing-Stop Techniques

    The important decision to exit a position must be based on more than emotion if you want to be a disciplined trader.

You May Also Like

Hot Definitions
  1. Adverse Selection

    1. The tendency of those in dangerous jobs or high risk lifestyles to get life insurance. 2. A situation where sellers have ...
  2. Wash Trading

    The process of buying shares of a company through one broker while selling shares through a different broker. Wash trading ...
  3. Fixed-Income Arbitrage

    An investment strategy that attempts to profit from arbitrage opportunities in interest rate securities. When using a fixed-income ...
  4. Venture-Capital-Backed IPO

    The selling to the public of shares in a company that has previously been funded primarily by private investors. The alternative ...
  5. Merger Arbitrage

    A hedge fund strategy in which the stocks of two merging companies are simultaneously bought and sold to create a riskless ...
  6. Market Failure

    An economic term that encompasses a situation where, in any given market, the quantity of a product demanded by consumers ...
Trading Center