What is a Contingent Order?
Contingent orders are investment orders that are structured of two or more steps that must occur in a specified sequence. Until the first step in the process is completed, the broker is not authorized to move on to the second step in the sequence. The contingent order helps to ensure that certain conditions must take place before an investor engages in the purchase or sale of various stocks and other forms of securities. One of the most common structures for a contingent order will include two sub-orders involving the purchase and sale of a stock or security. For example, an investor may submit an order to the broker that specifies that a certain stock is not to be purchased until a different stock in the investor portfolio can be sold at a specified price per share. The broker will hold on to the order and not attempt to initiate the sale of the incumbent stock until it achieves a certain price. Upon successfully selling the stock under the conditions specified by the investor, the br
Contingent Orders enable you to set a condition that will trigger the execution of an equity or single-leg option order. You can set a value for the following triggers for a stock or index: Last Trade (eligible for both stocks and indices) Bid (eligible for stocks only) Ask (eligible for stocks only) Volume Change % Up Change % Down 52-week high or 52-week low Execution of an order is triggered if the equity or index is: Greater than the trigger price Greater than or equal to the trigger price Less than the trigger price Less than or equal to the trigger price You can set “Time in Force” as either a Day Order or Good ’til Canceled. Once your condition is met, your order is placed as any of the following types: Market Limit Stop Loss Stop Limit And all of the Trailing Stop Order types Simply put, a Contingent Order gives you the choice to use several different conditions to trigger your Order.
