InvestorQ : What are the types of orders that a trader can place in the commodity markets?
simran Kaur made post

What are the types of orders that a trader can place in the commodity markets?

Dawn Cherian answered.
3 years ago

There are broadly 4 kinds of orders that one can place in the commodity markets. Remember, commodity trading is available on gold, silver, crude oil, zinc, pepper etc. Here are the four kinds of orders that you can place in the commodity markets…

The most common and popular order in the commodity markets is the Day Order. This order is valid only for the date on which the order is placed. So if you place an order to buy 1 contract of gold on 16th of August, then the Day order will be valid till trading closes on the 16th of August. If the order is not executed before the end of the trading, then the order will be automatically cancelled. You do not need to manually cancel the order. The Day Order stands automatically cancelled at the end of the trading day by the system itself.

The second kind of an order is the Good-till-Cancelled (GTC) order. The GTC order is more popular among savvy commodity traders and hedgers who are willing to wait longer to get the price of their choice. This GTC order will be open till the time the trader placing the order actually cancels the order or the order gets automatically executed. Remember, all GTC orders will automatically stand cancelled on the expiry date. For example, the Crude Oil contract expires on 21st August 2017. On that day, all GTC orders on crude oil that are not cancelled manually or executed will stand automatically cancelled by the system on 21st August.

Good-Till-Date (GTD) order is a slight variant of the GTC order. The only difference is that in a GTD order, the date is specified in advance and if the order is not executed by that data then it stance automatically cancelled. A GTD order can only be placed on a date that is prior to the expiry data of that particular contract.

The fourth kind of an order in the commodity markets is an Immediate or Cancel (IOC) order. This is again used by savvy traders who want to make the best of a surge in price volatility so that they can get the best price either ways. The IOC order if not executed immediately at the said price and volume specification is immediately cancelled.