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Types of orders on the Prague Stock Exchange

Stock trading on the Prague Stock Exchange


Stock trading is intended for clients wishing to achieve above-average yields even though they have to take a risk that they may lose a part of their investment or all its amount.


Market, Limit, Stop Limit, Stop Limit Order tu buy

MARKET ORDER

Order to buy – stocks will be bought at the lowest available price on the market
Order to sell – stocks will be sold at the highest available price on the market

LIMIT ORDER

Order parameters:
Limit price (price condition)

Order to buy – stocks will be bought at the lowest available price on the market, at the set limit price at the most.
Order to sell – stocks will be sold at the highest available price on the market, at the set limit price at least.

STOP LIMIT ORDER

The order can also be described as a limiting order with an activation condition. It is primarily used for a timely response to a fast market change.

STOP LIMIT ORDER TO BUY

Use:
The client wishes to buy securities on the condition that the price breaks the set barrier. But at the same time the client wishes to set the maximum price at which the client is willing to buy. (For example, the announcement of important results of a company is expected. If the results are extremely good, the stock price can break a significant barrier and soar. In such a case, the client wishes to profit from such growth.)

Order parameters:

Activation price: The price activating the order to buy. To activate the order to buy, such a price or higher price must be traded once on the market. Condition for setting the activation price: The activation price must be > the current price (price of the last concluded trade).

Limit price (price condition): The maximum price at which the client is willing to buy securities.

Example: Stop limit for purchase

• Current price: CZK 480
• The client wishes to buy securities on the condition that the price breaks the barrier of CZK 500, but is not higher than CZK 515.
• The client will give the order: STOP LIMIT

• Activation price: CZK 500
• Limit price: 515

If a price that is higher than or equal to CZK 500 is traded, an order to buy will be sent to the market. As for the type, it is a limit order. Securities are bought at the lowest available price on the market, at the set limit (CZK 515) at the most.

Stop Limit Order to sell

STOP LIMIT ORDER TO SELL

Use:

The client holds securities and wishes to secure against a loss resulting from a possible sharp price decline. (For example, the announcement of important results of a company is expected. In case of surprisingly negative results, the stock price may fall sharply. The client wishes to secure against a big loss and therefore gives a stop limit for sale.)

Order parameters:

Activation price: The price activating the order to sell. To activate the order to sell, such a price or lower price must be traded once on the market.

Condition for setting the activation price: The activation price must be < the current price (price of the last concluded trade)

Limit price: The minimum price at which the client is willing to sell securities.

Example: Stop limit for sale

• Current price: CZK 520
• The client wishes to secure against a sharp price decline, wishes to sell securities on the condition that the price breaks the barrier of CZK 500, but not lower than at CZK 485.
• The client will give the order to sell: STOP LIMIT

• Activation price: CZK 500
• Limit price: 485

If a price that is lower than or equal to CZK 500 is traded on the market, then an order to sell is sent to the market. As for the type, it is a limit order. Securities are sold at the highest available price on the market, at the set limit (CZK 485) at least.

Special parameters of instructions

Trade a maximum number of pieces, cancel the rest (IOC – immediate or cancel) – the instruction is either immediately satisfied or cancelled. If it is satisfied in part only, the unmatched part of the instruction will be cancelled automatically.

Trade everything immediately or cancel (FOK – fill or kill) - the instruction must be either immediately fully satisfied or cancelled.

Displayed number of securities (iceberg instruction) – if a lower displayed number of securities than than the total number of securities of an instruction is specified, the specified displayed number will only be seen on the market during continuous trading. This instruction type enables you to give an instruction with a big number of pieces without notifying the market of the total number of pieces.

Validity of instructions

The maximum validity of instructions given through Česká spořitelna is 90 calendar days.

As regards instructions with the following parameters:
• Market buying instruction
• Trade the maximum number of pieces immediately, cancel the rest (IOC)
• Trade everything immediately or cancel (FOK)
• Displayed number of securities – will be different from the actual number of tradable securities, such instructions will only be valid for 1 day.




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