Contingent Order

If you’re going to buy or sell a stock or commodity, Rule #1 is to never pay the market price. Instead, use contingent orders to squeeze out additional gains and ensure that you’re getting the best price possible.

Contingent orders offer you a way to buy or sell an asset only if a different event transpires.

Think of it this way. You want to be able to go to see a movie tonight, but you only want to see the 7:30 pm show. So, you call the box office and say, “Listen, movie man, I want to see The Big Movie tonight, but only if there are tickets for the 7:30 showing.” And the Movie Man says, “we’re sold out, but we have tickets at 10:45 pm.” And you say, “No dice, Movie Man! My order was contingent on that ticket being available at a particular time.”

In the market, you can say you want to buy a stock, but only if it's available at a specific price point (not the market price). This is called a limit order, and it will only happen if a seller makes a given price available.

The six most common contingent orders are the buy limit order, the sell limit order, the buy stop order, the sell stop order, the buy stop limit, and the sell stop limit. There's your homecoming court, right there.