Above the Market Order Type
Above the Market Definition
An above the market order is a request to buy or sell a security above its current price. This type of order is utilized for both short and long positions. This order type can be used to both initiate and exit positions. This is a favorite for momentum traders, because they will only want to execute an order if a particular price level is met. So, an above the market order type is used as insurance that the security has enough strength to clear a particular resistance level. Conversely an above the market order is used as a stop strategy for short positions that go awry.
Above the Market Order Types
There are a number of above market orders utilized by traders on a daily basis. Below are a list of the most common types:
Limit order to sellOrder is placed above the current price in order to exit a winning long position.
Stop limit order to buyA buy order is placed above current market levels. This is a popular strategy for breakout traders who are waiting for price confirmation prior to entering a position.
Stop Market Order to Buy to CoverThis is a stop strategy for short positions, where a trader places a buy to cover order above current market levels in order to stop out a losing position.
Above the Market Order Chart Example
Below is an example of an above the market order buy order for UYG. So, if UYG is able to clear $14, a buy order will be executed to enter a long position.