How to Place Your First Order

Placing an order is the point at which reading becomes doing, and it is where new investors are most likely to make an avoidable mistake — not a mistake of judgement about the company, but a mechanical one about the order itself. This tutorial covers the mechanics.

No security is named or suggested anywhere in it. The worked example is hypothetical.

Before you place anything

Three things need to be true before an order can succeed. Your account must be open and active. Cleared funds must be in it — money that has been sent but not yet credited will not support a purchase. And the market must be open, since orders placed outside the session queue rather than execute.

It is also worth deciding, before you open the order screen, what you are trying to do and at what price you would decline. Deciding that with the ticket already in front of you is how people end up paying more than they meant to.

The four parts of an order

Every order, however it is submitted, comes down to four decisions.

1. Which securityIdentified by its symbol. Symbols can look alike; confirm you have the company you intend before going further.
2. Buy or sellThe side of the trade.
3. QuantityThe number of shares. Check the digits — an extra zero is the most expensive typing error in the market.
4. Price instructionWhether you will accept the prevailing price, or only a price you specify.

Market orders and limit orders

A market order says: execute now, at the best price currently available. It maximises the chance of being filled and gives you no control over the price. In an actively traded share during a calm session, the price you get will usually be close to the one you saw. In a thinly traded share, or a fast-moving one, it may not be — a market order executes against whatever is in the book, and if the book is thin, that can be materially worse than the last quoted price.

A limit order says: execute only at this price or better. Buying with a limit of PKR 100 means you will pay 100 or less, never more. It gives you control of the price and removes the guarantee of execution: if the market never reaches your limit, nothing happens.

Neither is superior. The trade-off is genuinely a trade-off — certainty of execution against certainty of price — and which one matters more depends on why you are trading. For a considered investment where a few paisa either way is irrelevant to the thesis, a limit order costs you little and protects you from a bad fill. For an exit you have decided you want completed, a market order does the thing you actually want.

How long an order stays alive

An unexecuted order does not last forever. A day order expires at the end of the session if it has not been filled, which means an unfilled limit order must be re-entered the next day if you still want it. Other validity instructions may be available depending on the platform and the security.

The practical point is to know which one you used. Investors are periodically surprised either by an order that vanished overnight or by one that executed days later when they had stopped watching.

Reading the quote before you commit

Before placing an order it is worth looking at more than the last traded price. The last price tells you where a trade happened; it does not tell you where you can trade now.

What matters is the bid — the highest price a buyer is currently offering — and the ask, the lowest a seller will accept. If you are buying at market, you are buying at the ask. The distance between the two is the spread, and in a thinly traded share it can be wide enough to matter more than any view you have about the company.

The quantity available at each price is equally important. Seeing an attractive ask price is of limited use if only a handful of shares are offered there; a larger order will fill the rest at worse prices.

A worked example

The following is hypothetical, uses a fictional company, and ignores all taxes, fees and charges. It illustrates arithmetic, not a recommendation.

Suppose a share is quoted with a bid of PKR 98 and an ask of PKR 100, and you want 200 shares.

• A market buy executes against the ask. If 200 shares are offered at 100, you pay PKR 20,000 gross. If only 50 are offered at 100 and the next 150 at 101, you pay PKR 20,150 — the price moved against you as your own order consumed the book.
• A limit buy at 99 sits between the current bid and ask. It executes only if a seller becomes willing to accept 99. That may happen in a minute, or not at all.
• A limit buy at 100 executes immediately against the ask, but with a ceiling: if the book is thinner than it looked, the portion above 100 simply does not fill, rather than filling at 101.

That last case is the one most worth internalising. A limit order set at the current ask gives you most of the immediacy of a market order and still protects you from a thin book.

Modifying and cancelling

An order that has not executed can generally be modified or cancelled. An order that has executed cannot be undone — the trade exists and will settle.

Partial fills are worth understanding here. If 200 shares were ordered and 80 executed, you own 80; the remaining 120 stay in the book as a live order unless you cancel them. People forget the remainder and are then surprised when it fills later.

Why an order did not execute

The usual reasons, roughly in order of how often they turn out to be the explanation:

• The limit price was never reached. The market simply did not come to you.
• Price and time priority. Others were ahead of you in the queue at the same price and absorbed the available quantity.
• The order was placed outside the session. It queued rather than executing.
• The security hit a price limit. At the limit there may be no counterparty at all.
• Insufficient cleared funds or shares. The order was rejected at entry.

Selling, and what differs

Selling works the same way in reverse, with one addition: the shares must actually be available to deliver for settlement. Shares bought are available to sell according to the settlement cycle, so a purchase settling on T+2 is not immediately re-sellable on the same basis as long-held stock.

The harder part of selling is not mechanical. Deciding to sell is where most of the emotional difficulty in investing sits, which is why many investors decide in advance — at the point of buying — what would make them exit, and write it down.

Contract notes and statements

After execution you should receive a contract note or trade confirmation setting out the security, quantity, price, date and every charge applied. Read it against what you intended.

Check the security, the quantity, the price and the side. Then check the charges, and if a line is unfamiliar, ask what it is. Our Fees, Charges & Taxes page explains the lines that can legitimately appear and who sets each one.

Discrepancies should be raised promptly. The window for correcting an error is not open indefinitely, and a confirmation you did not read is not a defence.

Keeping the account secure

A trading account is a financial account and deserves the same care as a bank account.

• Never share your password or a one-time PIN. No legitimate broker will ever ask you for either — not by phone, not by email, not on WhatsApp.
• Keep the registered mobile number and email under your own control. They receive your confirmations and your OTPs.
• Treat any unexpected message about your account as suspicious until you have verified it by calling the number published on the firm's own website.
• Read your confirmations. An unauthorised trade is discovered by someone reading a statement, not by anything else.

Habits worth building early

Write down why you bought something at the time you buy it. Six months later, when the price has moved and your memory has quietly rewritten your reasoning, the note is the only honest record of what you actually thought.

Check the digits before submitting. Read the contract note when it arrives. And resist the urge to watch the price continuously — it produces activity rather than judgement, and activity has costs.

Frequently asked questions

The mechanics are the easy part

Order entry is learnable in an afternoon. What takes longer is the judgement about what to buy and how much of it, and the discipline to leave a decision alone once it is made.

If you would like someone to walk you through your first order rather than reading about it, our client desk will do that. There is no charge for asking.

Continue learning

• Pakistan Stock Exchange Guide — how orders are matched and how trades settle.
• Risk Management — how much to commit to any single position.
• Fees, Charges & Taxes — every line that can legitimately appear on a contract note.
• Client Support — if something on a statement does not look right.