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Order Types & Trade Execution Flashcards

7 cards from real Day Trading practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Order Types & Trade Execution flashcards as text

  1. A bracket order in day trading consists of:

    Answer: Three orders: an entry order plus a profit-target limit and a stop-loss order

    A bracket order simultaneously places an entry order along with a preset profit-target limit order above and a stop-loss below, automating both the upside exit and the downside protection.

  2. An 'Immediate or Cancel' (IOC) order:

    Answer: Allows partial fills and automatically cancels any unfilled portion right away

    An IOC order executes as much of the order as possible immediately and cancels the remaining unfilled quantity, allowing partial fills — unlike a Fill or Kill order which requires complete immediate execution.

  3. Order routing in day trading refers to:

    Answer: The process of directing an order to a specific exchange, ECN, or market maker for execution

    Order routing is the process of sending a trade order to a specific execution venue (NYSE, NASDAQ, ECN, market maker), directly impacting execution speed, price quality, and fill rate.

  4. The bid-ask spread in a stock quote represents:

    Answer: The difference between the highest buyer's price and the lowest seller's price

    The bid-ask spread is the gap between the highest price buyers will pay (bid) and the lowest price sellers will accept (ask), representing the implicit cost of executing an order at market immediately.

  5. When a day trader executes a short sell order, they are:

    Answer: Borrowing shares to sell now with the intent to repurchase them at a lower price

    Short selling involves borrowing shares from a broker, selling them at the current market price, and aiming to buy them back later at a lower price to profit from the decline.

  6. A Market-on-Close (MOC) order executes:

    Answer: At the official closing price at the end of the current trading day

    A Market-on-Close order is designed to execute at or very near the official closing price of the session, used by traders seeking end-of-day price fills.

  7. Price improvement in order execution occurs when:

    Answer: An order fills at a better price than the quoted bid or ask at the time of submission

    Price improvement occurs when an order executes at a better price than the best quoted bid or ask at submission time, directly benefiting the trader with a more favorable fill.