When it comes to Commodity Basis trading, you need to understand that all trades are made up of separate orders. These separate orders will be used for the complete trading process. In line with this, all trades are consist of two different orders. First, is to get the trade and the second one is to exit the trade. You should also need to be aware that order types will be always the same whether you are trading on stocks, commodity future trading, and currencies.
The Order Process
A single order, veg oil prices, for example, is either a buy or sell order. While the order can be used whether you are going to trade or exit a trade. Let’s just say that a trade is entered to a new buyer, the order will be exited as the sell order. You as a trader presumes that your certain stock will increase its price soon, you can execute a simple trade which is consist of a buy order. You need to look for a buy order in order for you to exit the trade of this certain stock of yours. The same principle goes when you as a trader expect that a certain stock will decrease its price, you can execute one sell order so you can enter a trade which is also called by many as shorting.
Marketing Order
The commodity cash trading, on the other hand, is called a marketing order. As a trader you will you will buy or sell a current price. But, keep in mind that whatever the price it could be, in an active market, the market order will be always be filled. Of course, not necessarily the exact price These market orders are used are for traders who are willing to take the risk with a slightly different price. In addition, when it comes to trading market information, if you are selling for an instance, your market order will be filled at the bid price.
Limit Orders
This type of order is for any traders who are interested to buy or sell an order on a specific price. However, unlike the marketing order, limit orders may or may not be filled. This will vary depending on the market movement. While, if the order, for example, was filled, it will be at the chosen price or much even better.
Stop Orders
This type of order is somewhat like the Marketing Order. Commodities are ordered on a buy or sell basis asset at the best price as possible. It can be lucrative as it sounds, but these orders will only be processed if the market will reach a specific price.
Conclusion
A market order in commodity trading is used by traders to enter or exit the position as quickly as possible. It can be filled, but it does not necessarily mean that you are going to get the price as you expected. In traders term, it is called as slippage. A limit order as the name it suggests is to cap the amount that has been paid. While stop order is used so a trader can capture a specific price higher on a buyer.
Commodity Basis 