At-or-Better Definition

What Is At-or-Better?

At-or-better orders are executed only at a specific price or above. They are an example of a limit order, which sets a specific price to be met for a trade to be made.

Key Takeaways

  • At-or-better orders are examples of limit orders. They are executed at a specific price or above.
  • Limit orders take longer to execute and may not even be executed because of their specific price requirements.
  • Placing an at-or-better order is looking for a breakout and wanting to participate in the next move upwards.
  • With the advent of high-speed trading, lay investors need to fully understand the many types of trades they can make, ranging from all-or-none to at-or-better orders.

Understanding At-or-Better

At-or-better orders are a type of limit order as opposed to market orders. Market orders are executed more quickly than limit orders and are the best choice when wanting the fastest possible trade with less concern about a specific price when taking a long position in a stock. Market orders cost less than limit orders but do not guarantee a price.

Limit orders take longer to execute given their specific price requirements and may not be executed for a long time, or ever, if the desired price does not become available. Because limit orders are more complicated to trade, they carry higher brokerage fees than market orders.

Investors use a variety of order types depending on the particular situation. An investor placing an at-or-better order is looking for a breakout and wants to participate in the next move upwards by having an order already placed to go into effect at that price.

Stop orders are commonly used as a way to convert a limit order into a market order. Once a stock price hits the price you determine, the order converts to a market order that will buy at the next available price.

A variant of the stop order is the stop-limit order. For example, an investor can set a stop-limit order with a stop price of $25 and a limit price of $23. In this case, once the price hits the stop price of $25, it becomes a limit order that will not transpire unless the price reaches the $23 share price.

In all the above instances the investor has decided that a particular stock is only of interest at a certain buy or sell price. These limit orders are instrumental in allowing day traders and chartists to set up many simultaneous automated orders all with buy and sell levels in place.

Placing At-or-Better Orders in the Modern Era

Technology has transformed how stock orders are placed, taking what was once an area of expertise confined to professional brokers and handing it to the masses via online trading sites. Volumes and volatility have increased with the advent of high-speed trading.

With this change in how orders are placed comes the need for lay investors to fully understand the many types of trades they can make, ranging from all-or-none to at-or-better orders. This is why it is a good idea to spend time researching the many order types before placing trades.

What Are the 5 Types of Orders in Trading?

There are a variety of orders that a market participant can place with a market maker when making a trade. The most common ones are: market order (buy or sell stock at the current price); limit order (buy or sell stock at a specific set price or better); stop order, or stop-loss order (an order that sells a stock when it hits a certain price); stop-limit order (a trade that combines features of a stop and limit order); and a trailing stop order (a stop order based on a change in percentage).

What Is An At Best Order?

At best orders tell the broker to complete a buy or sell order at the best price possible at the moment, and to fill that order as quickly as possible. An At best order assures the market participant making the order that the order will be executed, provided there's a willing counterparty for the whole order. However, price can't be guaranteed.

What Is the Difference Between a Limit Order and a Stop Order?

Limit orders are different from stop orders. A limit order sets a maximum price you're willing to pay to buy a security and a minimum price you're willing to accept for a sale. A stop order clicks into place when the security first hits a pre-determined price and is filled at the next available price.

Article Sources
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  1. Corporate Finance Institute. "Trade Order."

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