An open order refers to a buy or sell order that remains unfilled.
This order is typically valid until executed or canceled by the trader, or in some cases, until the close of the trading day.
Open orders may remain in place for extended periods, particularly if they are not limit orders (orders to buy or sell a security at a specific price or better).
There are different types of open orders, including:
- Market Order: This is an order to buy or sell a security at the current market price. It remains an open order until the trade is executed.
- Limit Order: A limit order is an instruction to trade a security at a specific price or better. For instance, a buy limit order will only be executed at the limit price or lower, while a sell limit order will only be executed at the limit price or higher.
- Stop Order (also known as a “stop-loss order”): This is an order to buy or sell a stock once it reaches a particular price, known as the stop price. When the stop price is reached, the stop order becomes a market order.
Open orders are a key aspect of trading, as they allow you to set your trading strategy and then wait for the market to meet your conditions, rather than having to watch the market constantly.
However, they also require careful management, as market conditions can change rapidly and orders can potentially be filled at unexpected times.