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Position and Orders

Orders:

An order is a specific instruction to execute a trade. It includes details such as the security to be traded, the order type (market order, limit order, stop order, etc.), quantity, and any special conditions.

Algorithms generate and send orders to the market based on trading strategies. These orders represent the intent to buy or sell a financial instrument using the predefined conditions.

Types of Orders

  1. Market Order: A request to buy or sell a security at the best available price.
  2. Limit Order: An order to buy or sell a security at a specific (or better) price.
  3. Stop Loss Order: Automatically closes a position after realizing a defined loss.
  4. Take Profit Order: Automatically closes a position after realizing a defined profit.

Positions

A position represents the quantity of a financial instrument that a trader currently holds. It reflects the net exposure to a particular security, indicating whether the entity is “long” (owns the asset) or “short” (has sold the asset).

Positions are the result of executed orders. When an algorithm places a buy order, it acquires a long position, and when it places a sell order, it takes a short position. The overall portfolio is the sum of all individual positions. Profit and loss are determined by the changes in the value of these positions over time.