What is a passive order?
An order is passive when traders set a price that stock must reach before they go ahead with buying or selling. In contrast, aggressive orders are when a trader executes the order to buy or sell straightaway.
Key takeaways
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Passive orders occur when traders set a specific price that must be reached before buying or selling, unlike aggressive orders executed immediately.
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These are the most common type of orders and help traders ensure they don't buy or sell below their target price.
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Despite the name, passive orders still require a clear and active trading strategy to be effective.
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Passive orders can be cancelled prior to execution and come with expiration dates attached to them.
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If the limit prices are not reached within the time-frame, a new order must be placed to continue trading.
Where have you heard about passive orders?
They're the most common kind of order and can help traders make sure they don't buy and sell below their target price.
What you need to know about passive orders.
They are not exactly 'passive' as they still require a clear and active trading strategy. However, they can be cancelled prior to execution. They have an expiration date attached to them so if the limit prices are not reached within the time-frame, a new order will have to be placed.