Market-With-Protection Order

You log into your online trading account to buy 10 shares of GOOG. You just want to purchase the shares at the market price...whatever price it's trading at when the order executes is fine with you.

Meanwhile, you just signed up for really cut-rate WiFi...so the order takes awhile to process. And while the little icon is spinning on the screen, word gets out that the Chinese government is making a bid to purchase Google. They're tired of all the censorship discussion...they'll just purchase the company for $1 trillion or whatever, and run it themselves.

In the wake of the news, the stock skyrockets. In a few seconds, the stock jumps from $1,000 a share to $1,200 a share...all while your computer chugs along at 1997 dial-up speeds. What you thought would be a market order at around $1,000 is now executed at $1,200. Those 10 shares cost you $2,000 more than you expected.

A market-with-protection order would have prevented this.

It still represents a market order, but there's an additional stipulation that the transaction won't execute if a big move happens between the time you request the trade and the time the trade closes.

The order gets canceled as a market order if the stock moves a certain amount...and then becomes a limit order. If a big move happens, the order becomes one with a specified price ($1,000 in the GOOG example) rather than an order ready for any market price.

This kind of order generally executes at market price. But you've got protection against weird turns of events. Hence the name.