Brokers and Online Trading: Accounts And Orders
AAA
  1. Brokers and Online Trading: Introduction
  2. Brokers and Online Trading: What Does A Broker Do?
  3. Brokers and Online Trading: The Costs
  4. Brokers and Online Trading: Full Service Or Discount?
  5. Brokers and Online Trading: Choosing A Broker
  6. Brokers and Online Trading: Accounts And Orders
  7. Brokers and Online Trading: Conclusion

Brokers and Online Trading: Accounts And Orders


Types of Accounts
Depending on what type of securities you hold, there are four major choices you have when opening an account:

Cash Account: The basic account where you deposit cash to buy stocks, bonds, mutual funds, etc.

IRA Account: For people looking to set up an individual retirement account.

Margin Account: Margin basically allows you to borrow from your broker against the cash and securities in your account. Profits can diminish quickly when you use margin, so be very careful! Learn about how this works in our Margin Trading Tutorial.

Option Account: Only seasoned investors should consider this choice. This type of account allows you to trade options, which are much riskier investments than stocks or bonds.

If you already have a brokerage account and wish to move it to another broker the process is quite easy. Just contact the brokerage you are signing up with and they will either do the paperwork for you or help you with the proper forms.

I'm ready to trade, now what?

In order to make your trade you have to be specific about how you want the transaction to be performed. The following are common order types you'll encounter when placing an equity order using an online interface or the phone:

Market Order: An order that requires immediate execution at the best price available. These are generally the cheapest trades to place because there is little work or maintenance required by the broker.

Limit Order: An order to transact at a specified price. This guarantees the price at which you will buy or sell a security. Limit orders are usually more expensive than market orders.

Stop Order: A market order that trades after a specified level has been reached. This may be a stop-loss or stop-limit. The exact price cannot be guaranteed, but this can be a good way to protect your downside.

All or None (AON): A stipulation on a limit order either to buy or sell a security only if the broker can fill the entire order, not part of it.



Day Order: An order that expires at the end of the business day if it has not been filled.

Good Till Canceled (GTC):An order either to buy or to sell a security that remains in effect until the customer cancels it or until it is executed by the broker.

Fill-Or-Kill: An order for immediate execution. If it cannot be filled immediately the order is automatically canceled.

Short Sale: Short selling is an advanced investing technique in which stock is borrowed and sold with the hopes of returning the stock at a lower price.

Buy to Cover: An order placed to close out a short position.

Brokers and Online Trading: Conclusion

  1. Brokers and Online Trading: Introduction
  2. Brokers and Online Trading: What Does A Broker Do?
  3. Brokers and Online Trading: The Costs
  4. Brokers and Online Trading: Full Service Or Discount?
  5. Brokers and Online Trading: Choosing A Broker
  6. Brokers and Online Trading: Accounts And Orders
  7. Brokers and Online Trading: Conclusion
RELATED TERMS
  1. Derivative

    A security with a price that is dependent upon or derived from ...
  2. Security

    A financial instrument that represents an ownership position ...
  3. Series 6

    A securities license entitling the holder to register as a limited ...
  4. Internal Rate Of Return - IRR

    A metric used in capital budgeting measuring the profitability ...
  5. Board Of Directors - B Of D

    A group of individuals that are elected as, or elected to act ...
  6. Strike Width

    The difference between the strike price of an option and the ...
RELATED FAQS
  1. How can an investor profit from the increase in popularity of discount brokerages?

    Discount brokers generally don't improve profits by generating higher returns, although many purport to do just that. Rather, ... Read Full Answer >>
  2. What is a stock split? Why do stocks split?

    All publicly-traded companies have a set number of shares that are outstanding on the stock market. A stock split is a decision ... Read Full Answer >>
  3. Is there a difference between financial spread betting and arbitrage?

    Financial spread betting is a type of speculation that involves a highly leveraged derivative product, whereas arbitrage ... Read Full Answer >>
  4. How do I place an order to buy or sell shares?

    It is easy to get started buying and selling stocks, especially with the advancements in online trading since the turn of ... Read Full Answer >>
  5. What does a high turnover ratio signify for an investment fund?

    If an investment fund has a high turnover ratio, it indicates it replaces most or all of its holdings over a one-year period. ... Read Full Answer >>
  6. How does a forward contract differ from a call option?

    Forward contracts and call options are different financial instruments that allow two parties to purchase or sell assets ... Read Full Answer >>

You May Also Like

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!