A waiter asks you what you want for dinner. You say, "whatever you think is best." You figure...he's the expert. He works at the restaurant every day. He's tasted all the food...or at least seen it all get made. He's in a better position than you to decide what meal is the tastiest.
That’s the food equivalent of a not-held order.
The financial equivalent involves an investor giving their broker wide leeway in buying stocks (or other securities) on their behalf. Basically, you tell your broker, "whatever you think is best."
The not-held order gives your broker the ability to pick the time and price at which to fill the order. You might say, "Get me 100 shares of AMZN." If it's a not-held order, the broker can than wait to pick the best spot to buy the 100 shares. So you might not get the shares at the current market price; the trader might wait for a better time to get the stock at a better price.
With a not-held order, the broker isn't liable for any mistakes they might make. If they think they can get a better price by waiting, and shares go up in the meantime, you can't sue them for missing out on the lower price. You put your faith in them, and you have to trust that they did the best they can. (Unless, of course, you can prove actual negligence or fraud...but if they made a good-faith effort to get you the best price, they aren't liable for an adverse turn of events.)
Related or Semi-related Video
Finance: What is an Unsolicited Order?3 Views
finance a la shmoop what is an unsolicited order
alright well people it's just an order like to buy or sell a stock or bond or [Definition of unsolicited orders]
derivative security that you instruct your broker to execute all on your
lonesome that is the broker or another professional did not recommend you doing [Guy stood in front of Walmart]
that trade you did research on your own consulted alpha magazine and The Motley [The magazine on a disk]
Fool noted the massive number of Spinney fidgets things that were selling off the
shelves the last time you visited Walmart and decided to make an investing
statement based on that observation and in placing an unsolicited order you are
legally on your own if things fail ie the broker is exempt from any liability [Exempt from liability stamp]
for having made an incorrect or improper recommendation or whatever in real life
brokers have so many layers of legal coverage above their recommendations [A wedding cake]
that no it really doesn't matter if they sell you 20 bad stocks in a row you just
have to be appropriate for what you checked on the boxes in the form that [Investment criteria checklist]
you sent to them that well they're still likely immune to prosecution anyway yeah
no recourse or well your only recourse is to just fire them and hire this guy [Bonzo the chimp appears]
to pick stocks for yes yeah asking yourself well really how much worse
could he do had your broker been the one to stumble on the many sold out signs of
spinny things at Walmart and then she called you to suggest you buy shares of [Broker calling a client]
spinny fidget time-wasters.com well then the order would have been
considered a solicited one and in theory solicited orders carry a higher weight [Exempt from liability stamp is wiped away]
of scrutiny should something go awry and regulators get involved and basically it
revolves around that recommendation being appropriate to the risk levels and
duration levels and other levels of investing prowess that you proffer that
you actually have and yeah those regulators they mean business you really [Regulator holding a baseball bat]
don't want to be on their bad side
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