Optimizing Trading Strategies With TradeZero: Understanding Order Types And Their Applications

Unlike traditional investing, which, while still risky, allows you to sit and observe whether your thesis is correct, trading requires rapid responses, and opportunities arise quickly — but also fade quickly.

To capitalize on more of these opportunities (and to make the most of them), you’ll need to have appropriate tools, strategies, and know-how at your disposal. TradeZero’s suite of features has you covered as far as tools go — in terms of strategies, hands-on experience will show what fits your personal style and goals best.

However, no matter which strategy you utilize, there is one crucial element in common — the actual process of trading. To be more precise, the placing and execution of trading orders.

Order types are quite varied, with different strengths and weaknesses. With a solid grasp of how each order type works, as well as how they are properly used, you can make the most of your trades, taking advantage of opportunities you might have otherwise missed and increasing the efficiency of the trades you do place.

Let’s begin with the basics — common orders are something that you as a trader will use often, but understanding them fully is also crucial for properly utilizing complex order types.

Market Orders

A market order simply purchases or sells a stock at the current market price. As these orders ensure execution but not price, they are ideal when speed is more critical than price certainty.

This order type is useful in highly volatile markets where swift action is required to seize trading opportunities.

Limit Orders

With a limit order, a trader can input a maximum or minimum price at which an order, whether to buy or to sell a stock, can be executed.

This type of order affords traders precise control over execution price, ensuring trades only occur at favorable prices. This is essential for strategies that require precise entry and exit points, helping avoid unfavorable market conditions.

Let’s say that you’re eyeing a stock that is currently trading at $43, which you determine to be too expensive. You place a limit order at $39 — when and if the price drops to $39 or less, the order is executed.

Stop Orders

Also referred to as stop-loss orders, this order type works like this — a price is inputted into the order— once that price is reached, the order acts like a market order, executing a trade at the next best available price.

If you own a stock that is currently priced at $120, but are worried that the price will drop, you can place a stop-loss order at $115. If the stock’s price falls down to $115, the order triggers, selling the stock at that price, and limiting further losses.

Stop-Limit Orders

Stop-limit orders combine the features of stop orders and limit orders. When the stop price is reached, the order becomes a limit order rather than a market order. This provides more control over the execution price, reducing the risk of slippage in fast-moving markets.

If you own a stock trading at $80 and set a stop price at $75 with a limit price of $73, the order will activate as a limit order if the stock price drops to $75. This setup ensures it only sells at $73 or higher, helping you avoid selling at unfavorable prices during volatile conditions.

Advanced order types offer seasoned traders greater control and flexibility. Usually, these orders function either as market orders, limit orders, or stop orders, but with an additional element, such as time, or trailing based on price changes providing an additional level of complexity.

Trailing Stop Orders

With trailing stop orders, the stop price adapts as the price of the security in question moves. The idea is to have a safeguard in place that will dynamically adapt, allowing you to rest easy knowing that your profits are locked in — without having to manually adjust the stop all the time.

Here’s how a trailing stop works — you purchase a stock at $90 and set a trailing stop at $6 below the current market price. Now, let’s say that the price jumps up to $100 — the stop also moves to $94. If the stock should fall to $94 after that, the order will be executed, and you will have locked in a neat profit of $4.

Good 'Til Canceled (GTC) Orders

GTC orders simply stay active until the trader cancels them or they get executed. This type of order is great for traders who don’t want to enter their orders daily and are looking for specific price points that might not be reached in one trading session.

GTC orders are often used in strategies involving target prices expected to be hit over a longer term, such as swing trading.

Good for the Day (GTD) Orders

GTD orders, as the name suggests, remain active until the end of the trading day. They are automatically canceled if not executed by the market's close. This type is handy for traders who prefer making decisions based on the day’s price action without leaving open positions that could be affected by overnight market changes.

GTD orders help manage daily trading risk by ensuring positions are not held beyond the intended timeframe.

Now, let’s dive into how TradeZero’s specific tools and features synergize to allow traders to use these order types to their fullest potential.

TradeZero actually consists of four offerings — ZeroPro, ZeroWeb, ZeroFree, and ZeroMobile. This range allows traders to opt for the choice that best suits their needs, with the last entry on that list, ZeroMobile, ensuring convenient access at all times.

ZeroPro

ZeroPro is TradeZero’s flagship platform, and it’s chock-full of features that active traders will find useful. Level two quotes for all NYSE, AMEX, NASDAQ, and OTCBB equities ensure a more in-depth overview of what the markets are up to, while a dynamic scrolling news section ensures that traders can stay on top of all major news events.

For the sake of convenience, traders can use the Portfolio Window feature for a clean, simple overview of their current holdings, as well as unrealized gains/losses, any open positions, current buying power, and order history.

In much the same way, custom watchlists are great for keeping an eye on certain tickers or entire market segments, while the “Top List” shows 10 of the day’s most active symbols, perfect for finding short-term opportunities. To further sweeten the pot, the High Low Ticker feature gives a simple overview of all the stocks that are hitting their daily highs or lows, as well as 52-week highs or lows.

ZeroPro also supports conditional orders — in essence, the feature allows you to have an order placed automatically if a previously defined order is executed.

Although approachable and user-friendly, the platform really shines in the hands of experienced, active traders who require a feature-rich suite in order to make the most out of their trading strategies.

ZeroWeb and ZeroFree

ZeroWeb is browser-based, so it can be run on a variety of devices, including desktops, laptops, and tablets. No matter how many windows you open, all of them will sync in real-time, tick for tick.

Users of ZeroWeb and ZeroFree also gain access to the Portfolio Window, charting, and line drawing tools, as well as level 2 market data. The platform supports a pretty robust set of hotkeys in terms of controls, allowing experienced traders to place trades at the drop of a hat.

Last but not least, ZeroWeb and ZeroFree support a slightly more limited version of watchlists — users can create a maximum of 5 watchlists with up to 30 stock symbols in each.

ZeroFree, while cost-free, provides essential features without compromising functionality, making it accessible for budget-conscious traders.

ZeroMobile

For traders who need to manage their portfolios on the go, ZeroMobile ensures that market access is just a tap away. This platform is critical for implementing time-sensitive strategies that require the ability to place orders quickly from anywhere. Whether it’s adjusting a Stop-Loss or executing a Limit Order as market conditions change, ZeroMobile provides the necessary agility and functionality.

TradeZero enhances trading further with features like free limit orders, which encourage strategic order placement without additional costs. Additionally, the high day trading leverage of up to 6:1 empowers traders to maximize their potential returns on intraday movements, providing the capability to take larger positions with less capital.

TradeZero not only offers sophisticated trading platforms but also enhances the trading experience with unique features designed to provide additional flexibility and strategic advantages in order execution.

Commission-Free Trades

TradeZero offers commission free trading for certain types of limit orders., which means you can place a high volume of trades without incurring standard commission fees. This allows you to trade as much as you want, expanding the range of potentially profitable strategies at your disposal.

However, it's important to note that there are specific types of trades and situations where commissions may apply. We encourage traders to familiarize themselves with TradeZero’s detailed fee structure to understand all possible costs associated with the relevant trading activities.

Short Locates Plus

TradeZero’s Short Locates Plus feature enables traders to access hard-to-borrow stocks for short selling. This tool also offers the option to mark unused locates for credit, allowing traders to recoup some of the cost associated with shorting, increasing overall profitability.

Extended Trading Hours

Regular stock market trading sessions last from 9:30 AM to 4 PM. However, the market never sleeps, and with news stories, catalysts, and other important events taking place throughout the entire day.

With short-term trading being so focused on rapidly responding to market changes, this presents an issue. However, there are two additional trading sessions — the premarket sessions and the postmarket session, but they aren’t accessible to traders by default.

However, TradeZero offers clients access to both — with extended trading hours from 4 AM to 8 PM, which allow traders to get in early on the large price swings associated with earnings releases, geopolitical events, or the release of macroeconomic data.

Mastering different order types is essential for successful trading strategies. TradeZero's advanced platforms and unique features equip traders with the necessary tools to execute these strategies with precision and flexibility.

The combination of real-time data, customizable environments, and mobile solutions ensures traders can respond quickly to market conditions. Features like commission-free trades, Short Locates Plus, and extended trading hours provide additional strategic advantages, allowing you to make the most of all the orders you place — whether you opt for a simple market order or a complex, conditional, GTD trailing stop order.

Shane Neagle's trading experiences and accomplishments are unique, and your trading results may vary substantially from his. TradeZero is not responsible for and neither affirms nor endorses any of Mr. Neagle's views or opinions expressed in this content. TradeZero makes no representations or warranties with respect to the accuracy of this content or information available through any referenced or linked third party sites. This content has been made available for informational and educational purposes only and should not be considered trading or investment advice or a recommendation as to any securities.

Trading securities can involve high risk and potential loss of funds. Furthermore, trading on margin is for experienced investors and traders only as the amount you may lose can be greater than your initial investment. Likewise, short selling as a securities trading strategy is extremely risky and can lead to potentially unlimited losses. Options trading is not suitable for all investors as it can involve risk that may expose investors to significant losses. Please read the Characteristics and Risk of Standardized Options, also known as the options disclosure document (ODD) at https://www.theocc.com/Company-Information/Documents-and-Archives/Options-Disclosure-Document before deciding to engage in options trading.

A call option gives the option buyer the right but not the obligation to buy the underlying security of the option at the strike price. In contrast, a put option gives the owner the right to sell the underlying security at the strike price. The purchaser of call or a put option risks the cost of the option premium that they paid if the option expires out of the money or it never exercised. The seller of a call option, in the case of an assigned covered call, risks the loss of the underlying security and, in the case of an assigned naked call, risks the cost of purchasing the underlying security at prevailing market rates. The seller of a put option, in the case of a cash-secured put, risks the premium received for the put and the

cash cost to pay for the underlying security, and in the case of a naked put, risks the cost of purchasing the underlying security at a price higher than market value.

TradeZero provides self-directed brokerage accounts to customers through its operating affiliates: TradeZero America, Inc., a United States broker dealer, registered with the Securities and Exchange Commission (SEC) and member of the Financial Industry Regulatory Authority (FINRA) and the Securities Investor Protection Corporation (SIPC); TradeZero, Inc., a Bahamian broker

dealer, registered with the Securities Commission of the Bahamas; and TradeZero Canada Securities ULC, a Canadian broker dealer, member Firm of Canadian Industry Regulatory Organization (CIRO) and a Member of Canadian Investor Protection Fund (CIPF). Shane Neagle is a paid marketing partner of TradeZero.