DEFINITION of 'Scale Order'

A type of order that comprises several limit orders at incrementally increasing or decreasing prices. If it is a buy scale order, the limit orders will decrease in price, triggering buys at lower prices as the price starts to fall. With a sell order, the limit orders will increase in price, allowing the trader to take advantage of increasing prices, thereby locking in higher returns.

BREAKING DOWN 'Scale Order'

For example, if a trader believes that a stock will fall over the course of the day, a scale order will help him or her take advantage of the lower price if the prediction is correct. If the trader wants to purchase 1,000 shares of the company, he or she may scale the limit orders so that 100 shares are bought for every $0.50 fall in price.

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