When trading coffee futures, there are many types of orders you can use. Knowing how to place the right order at the right time is a key factor for successful investing. Below are the most commonly used order types:
Daily Order
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A daily order is valid only for the current trading session. It will automatically be canceled when the market closes. This is the most commonly used order type.
Market On Open (MOO)
This is a market order placed before the market opens. The execution price is not guaranteed to match the opening price; it depends on the available prices and quantities on the opposite side of the market.
Market On Close (MOC)
This is a market order placed before the market closes and is executed after the market has closed. It follows the same principle as the Market On Open order.
Stop Loss Order
A stop loss order is used for three purposes:
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To minimize losses on a long or short position.
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To protect profits on an existing position.
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To open a new position when a specific price level is reached.
There are two types:
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Stop Loss (No Limit): A special type of market order. For a buy stop, the stop price is above the current market price; for a sell stop, it is below the current market price. When the market reaches the stop price, the order becomes a regular market order.
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Stop Loss (Limit): Similar to the no-limit stop but includes a limit price. For a sell stop, the limit price must be higher than the stop price and vice versa. The execution price will stay within the limit range if the order is filled. However, the order may fail to fill if the market moves beyond the limit price.
Good Till Cancel (GTC)
A GTC order remains active until it is either executed or manually canceled. It stays valid across multiple trading sessions.
Spread Order
A spread order is used to roll a position from a nearby delivery month to a more distant one while maintaining the same long or short position. The trader accepts a price difference between the two contract months.
One Cancels the Other (OCO)
This is when two orders are placed simultaneously; if one order is executed, the other is automatically canceled.
Market Order
A market order is executed at the best available price: buying at the lowest offered price or selling at the highest bid price.