There are two orders for trading of stock index futures, namely, market order and limit order. Before a transaction is made, the investor can change or cancel the order.
(1) Market order refers to the order without fixing specific price, under which the deal is made according to the best offer that can be exercised on the market. Besides, the market order, under which no deal is made, will be cancelled automatically. Because of these two strong points, it is adopted by most overseas exchanges. The market order can facilitate successful transactions of investors, but it can not guarantee the transaction price is the best deal. When the market sees dramatic fluctuation and price change, investors taking the market order might suffer higher impact cost in their trading.
(2) Limit order refers to the order, under which the deal is made according to the specific price or better offer. Once the deal is made, the transaction price is definitely what the investor has anticipated or a better price. But when the futures price is changing frequently, the limit order might not work at all, which as a result makes the investor lose the favorable market opportunity.
