A hold order is a type of market order that requires immediate execution, without allowing for discretion in obtaining the best price. It is used for quick position changes or to take advantage of emergent situations, but inexperienced traders may struggle with it. If the order cannot be filled, the client will be contacted for further instructions.
A hold order is a market order that directs a dealer to fill the order, whether it is a buy or sell, immediately. Generally, representatives are allowed to exercise some discretion when filling orders in order to obtain the best price for their customers. With a hold order, that is not possible, because the client wants the order to be filled quickly, regardless of price constraints, and the goal is to complete the order and close the deal as quickly as possible.
Both buy and sell orders can be placed in the form of a hold order. People generally use this type of order when they want to change their positions in the market extremely quickly, such as in cases where people feel that holding securities longer could expose them to unnecessary risk. This type of order can also be issued to take advantage of an emergent situation or a specific order, asking the representative to act quickly to complete the order before the opportunity is lost.
Under normal conditions, reps have time to shop around the highest buy offers and the lowest ask offers, choosing an offer for the customer that results in the best outcome. With a hold order, people may have to accept high bids for ask prices and low bids for ask prices, because they are not allowed much discretion in executing the order. Other traders can take advantage of this to get a better deal on a transaction when they know a hold order is involved.
This type of order is usually placed by an expert trader who is confident in the market. People with limited experience or poor trading skills may have trouble running trades too closely, as they may not understand market movements and could force their representatives to make poor investment decisions while acting on their behalf. A personal financial adviser or broker can help people decide the best type of order to place in a given situation, or people can turn over management of their stocks to an experienced trader and allow that person a high degree of discretion in trading. trade.
In rare cases, a hold order cannot be filled, such as if people are trying to sell and no one is buying. In these situations, the person who issued the order will be contacted to provide information about why the order failed and to request further instructions.
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