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Buy Minus Orders

Moneyzine Editor
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Moneyzine Editor
1 mins
January 9th, 2024
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Buy Minus Orders

Definition

The term buy minus order refers to broker instructions to purchase a stock at a price that is below the current market. Buy minus orders can also be combined with limit orders, and are placed by traders hoping to take advantage of a short-term decline in a stock's price.

Explanation

A trader will issue a buy minus order to their broker when they would like to purchase a stock under very specific circumstances. Generally, there are two market conditions that can result in the execution of a buy minus order:

  • The price paid for the stock cannot be higher than the last sale's price if that sale was a zero minus tick or a minus tick.

  • The price paid for the stock cannot be higher than the last price minus a specified change in the stock's price if the last sale was a zero plus or plus tick.

When combined with a limit order, the trader can effectively place an upper threshold value on the acquisition price of the stock.

Example

A trader would like to purchase shares of Company XYZ, but she would like to take advantage of a near term decline in the price of the company's stock. The trader places a buy minus order for 1,000 shares of stock at a limit price of $20.00; however, the current market price is $20.50.

This trade will execute if the price of Company XYZ's stock ticks down to $20.00, or moves past $20.00.

Related Terms

  • The term scale order refers to a series of limit orders of progressively increasing or decreasing prices. Scale orders are used by traders to ensure large transactions are not subject to deteriorating prices.
    Moneyzine Editor
    Moneyzine Editor
    September 21st, 2023
  • The term round lot refers to an order that is a multiple of the normal unit of trading for that security. A round lot for common stock is any order that is a multiple of 100 shares.
    Moneyzine Editor
    Moneyzine Editor
    September 21st, 2023
  • The term Order Protection Rule refers to a market requirement that ensures traders receive an execution price equivalent to the best that is offered on all exchanges that trade in the security. The Order Protection Rule is a provision of Regulation National Market System.
    Moneyzine Editor
    Moneyzine Editor
    September 20th, 2023
  • The term odd lot refers to an order that is not a multiple of the normal unit of trading for that security. An odd lot for common stock is any order that is not a multiple of 100 shares.
    Moneyzine Editor
    Moneyzine Editor
    September 20th, 2023
  • The term sell plus order refers to broker instructions to sell a stock at a price that is above the current market. Sell plus orders are placed by traders hoping to take advantage of a short-term advance in a stock's market price.
    Moneyzine Editor
    Moneyzine Editor
    September 21st, 2023

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