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LSDefine
Simple English definitions for legal terms
percentage order
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A quick definition of percentage order:
Percentage order is a type of instruction given to buy or sell a certain amount of a specific stock after a fixed number of shares of that stock have been traded. It is a way to ensure that the trade is made at a certain percentage of the market price. For example, if a percentage order is set at 5%, the trade will only be executed once the stock has moved 5% in either direction. This type of order is commonly used by investors who want to take advantage of market fluctuations while minimizing risk.A more thorough explanation:
A percentage order is a type of stock market order where a trader specifies a certain percentage of a stock's trading volume to be bought or sold after a fixed number of shares of the stock have been traded. For example, a trader may place a percentage order to buy 10% of a stock's trading volume after 100,000 shares have been traded.
This type of order is useful for traders who want to enter or exit a position based on the stock's trading activity. By waiting for a certain percentage of the trading volume to be reached, traders can avoid buying or selling at unfavorable prices.
For instance, if a trader wants to buy a large amount of a stock, they may place a percentage order to buy 10% of the trading volume after 100,000 shares have been traded. This way, they can avoid buying a large amount of shares at a high price if the stock suddenly spikes in value.