What Is a Day Order? Definition, Duration, Types, and Example

A day order is a type of order to buy or sell a security that is only valid for the current trading day. If the order is not executed by the end of the day, it is canceled. Day orders are often used by traders who are looking to take advantage of short-term price movements.

There are two main types of day orders: market orders and limit orders. A market order is an order to buy or sell a security at the best available price. A limit order is an order to buy or sell a security at a specific price or better.

Day orders can be placed through a broker or online trading platform. When placing a day order, the trader must specify the security to be traded, the quantity of shares, and the type of order (market or limit).

Day orders are a good option for traders who are looking to take advantage of short-term price movements. However, it is important to be aware that day orders can be risky. If the price of the security moves against the trader, the order may not be executed and the trader could lose money.

Here is an example of a day order:

A trader wants to buy 100 shares of ABC stock at the market price. The trader places a day order to buy ABC stock at the market price. If the price of ABC stock rises above the market price, the order will be executed and the trader will buy the stock. If the price of ABC stock falls below the market price, the order will be canceled and the trader will not buy the stock.

Day orders are a useful tool for traders who are looking to take advantage of short-term price movements. However, it is important to be aware of the risks involved before placing a day order.