What is an “at close order” in the stock market?
Usually backtests for (long-term) strategies are evaluated on a end-of-day basis where you only consider close prices. If your strategy performs well in these backtests, hopes are that if you use a market-on-close (MOC) order your performance will not diverge too much from the backtest. The fact that it won't diverge much is important if you keep backtesting the strategy along with the real trading to see regime changes or similar.  If you used end-of-day prices for the backtests but some arbitrary intraday market order, you'd have some difficulties to explain deviations between the two. What it is:  MOC orders can be submitted during the day, but they won't be executed until shortly before the market (or more precise the current session) closes. Investopedia defines it in the following way: It's essentially a market order that doesn't get entered until the last minute (or thereabouts) of trading. With this type of order you are not necessarily guaranteed the closing price but usually something very similar, depending on the liquidity in the market and bid-ask for the security in question. Traders who believe that a security or market will move more heavily during the last few minutes of trading will often place such an order in the hopes of having their order filled at a more desirable price.
Firstly what are you trading that you could lose more than you put in? If you are simply trading stocks you will not lose more than you put in, unless you are trading on margin. A limit order is basically that, a limit on the maximum price you want your buy order bought at or the minimum price you want your sell order sold at. If you can't be glued to the screen all day when you place a limit order, and the market moves the opposite way, you may miss out on your order being executed. Even if you can be in front of the screen all day, you then have to decide if you want to chase the market of miss out on your purchase or sale. For example, if a stock is trading at $10.10 and you put a limit buy order to buy 1000 shares at or below $10.00 and the price keeps moving up to $10.20, then $10.30 and then $10.50, until it closes the day at $11.00. You then have the choice during the day to miss out on buying the shares or to increase your limit order in order to buy at a higher price. Sometime if the stock is not very liquid, i.e. it does not trade very often and has low volume, the price may hit $10.00 and you may only have part of your order executed, say 500 out of your 1000 shares were bought. This may mean that you may have to increase the price of your remaining order or be happy with only buying 500 shares instead of 1000. The same can happen when you are selling (but in reverse obviously). With market order, however, you are placing a buy order to buy at the next bid price in the depth or a sell order to sell at the next offer price in the depth. See the market depth table below:  Note that this price depth table is taken before market open so it seems that the stock is somewhat illiquid with a large gap between the first and second prices in the buyers (bid) prices. When the market opened this gap is closed, as WBC is a major Australian bank and is quite liquid. (the table is for demonstration purposes only). If we pretend that the market was currently open and saw the current market depth for WBC as above, you could decide to place a limit sell order to sell 1000 shares at say $29.91. You would sell 100 shares straight away but your remaining 900 sell order will remain at the top of the Sellers list. If other Buyers come in at $29.91 you may get your whole sale completed, however, if no other Buyers place orders above $29.80 and other Sellers come into the market with sell orders below $29.91, your remaining order may never be executed. If instead you placed a market sell order you would immediately sell 100 shares at $29.91 and the remaining 900 shares at $29.80. (so you would be $99 or just over 0.3% worse off than if you were able to sell the full 1000 shares at $29.91). The question is how low would you have had to lower your limit order price if the price for WBC kept on falling and you had to sell that day? There are risks with whichever type of order you use. You need to determine what the purpose of your order is. Is it to get in or out of the market as soon as possible with the possibility of giving a little bit back to the market? Or is it to get the price you want no matter how long it takes you? That is you are willing to miss out on buying the shares (can miss out on a good buy if the price keeps rising for weeks or months or even years) or you are willing to miss out on selling them right now and can wait for the price to come back up to the price you were willing to sell at (where you may miss out on selling the shares at a good price and they keep on falling and you give back all your profits and more). Just before the onset of the GFC I sold some shares (which I had bought a few years earlier at $3.40) through a market order for $5.96. It had traded just above $6 a few days earlier, but if instead of a market order I had placed a limit order to sell at $6.00 or more I would have missed out on the sale. The price never went back up  to $6 or above, and the following week it started dropping very quickly. It is now trading at about $1.30 and has never gone back above $2.00 (5.5 years later). So to me placing a limit order in this case was very risky. Buy and sell orders always include the price at which you buy/sell. That's how the market prices for stocks are determines. So if you want to place a buy order at 106, you can do that. When that order was fulfilled and you have the stock, you can place a sell order at 107. It will be processed as soon as someone places a buy order at 107. Theoretically you can even place sell orders for stocks you haven't even bought yet. That's called short selling. You do that when you expect a stock to go down in the future. But this is a very risky operation, because when you mispredict the market you might end up owing more money than you invested. No responsible banker will even discuss this with you when you can not prove you know what you are doing. "Yes it is possible, as long as the broker you use allows conditional orders. I use CMC Markets in Australia, and they allow free conditional orders either when initially placing a buy order or after already buying a stock. See the Place New Order box below:  Once you have selected a stock to buy, the number of shares you want to buy and at what price you can place up to 3 conditional orders. The first condition is a ""Place order if..."" conditional order. Here you can place a condition that your buy order will only be placed onto the market if that condition is met first.  Say the stock last traded at $9.80 and you only want to place your order the next day if the stock price moves above the current resistance at $10.00. So you would Place order if Price is at or above $10.00. So if the next day the price moves up to $10 or above your order will be placed onto the market. The second condition is a ""Stop loss"" conditional order. Here you place the price you want to sell at if the price drops to or past your stop loss price. It will only be placed on to the market if your buy order gets traded. So if you wanted to place your stop loss at $9.00, you would type in 9.00 in the box after ""If at or below ?"" and select if you want a limit or market order. The third condition is a ""Take profit"" conditional order. This allows you to take profits if the stock reaches a certain price. Say you wanted to take profits at 50%, that is if the price reached $15.00. So you would type in 15.00 in the box after ""If at or above ?"" and again select if you want a limit or market order. These conditional orders can all be placed at the time you enter your buy order and can be edited or deleted at any time. The broker you use may have a different process for entering conditional orders, and some brokers may have many more conditional orders than these three, so investigate what is out there and if you are confused in how to use the orders with your broker, simply ask them for a demonstration in how to use them." "Your strategy fails to control risk. Your ""inversed crash"" is called a rally. And These kind of things often turn into bigger rallies because of short squeezes, when all the people that are shorting a stock are forced to close their stock because of margin calls - its not that shorts ""scramble"" to close their position, the broker AUTOMATICALLY closes your short positions with market orders and you are stuck with the loss. So no, your ""trick"" is not enough. There are better ways to profit from a bearish outlook." "The ""price"" is the price of the last transaction that actually took place. According to Motley Fool wiki: A stock price is determined by what was last paid for it. During market hours (usually weekdays from 9:30AM-4:00PM eastern), a heavily traded issue will see its price change several times per second. A stock's price is, for many purposes, considered unchanged outside of market hours. Roughly speaking, a transaction is executed when an offer to buy matches an offer to sell. These offers are listed in the Order Book for a stock (Example: GOOG at Yahoo Finance).  This is actively updated during trading hours. This lists all the currently active buy (""bid"") and sell (""ask"") orders for a stock, and looks like this:  You'll notice that the stock price (again, the last sale price) will (usually*) be between the highest bid and the lowest ask price. * Exception: When all the buy or sell prices have moved down or up, but no trades have executed yet." "Price is decided by what shares are offered at what prices and who blinks first.  The buyer and seller are both trying to find the best offer, for their definition of best, within the constraints then have set on their bid or ask. The seller will sell to the highest bid they can get that they consider acceptable. The buyer will buy from the lowest offer they can get that they consider acceptable. The price -- and whether a sale/purchase happens at all -- depends on what other trades are still available and how long you're willing to wait for one you're happy with, and may be different on one share than another ""at the same time"" if the purchase couldn't be completed with the single best offer and had to buy from multiple offers. This may have been easier to understand in the days of open outcry pit trading, when you could see just how chaotic the process is... but it all boils down to a high-speed version of seeking the best deal in an old-fashioned marketplace where no prices are fixed and every sale requires (or at least offers the opportunity for) negotiation. ""Fred sells it five cents cheaper!"" ""Then why aren't you buying from him?"" ""He's out of stock."" ""Well, when I don't have any, my price is ten cents cheaper."" ""Maybe I won't buy today, or I'll buy elsewhere. ""Maybe I won't sell today. Or maybe someone else will pay my price. Sam looks interested..."" ""Ok, ok. I can offer two cents more."" ""Three. Sam looks really interested."" ""Two and a half, and throw in an apple for Susie."" ""Done."" And the next buyer or seller starts the whole process over again. Open outcry really is just a way of trying to shop around very, very, very fast, and electronic reconciliation speeds it up even more, but it's conceptually the same process -- either seller gets what they're asking, or they adjust and/or the buyer adjusts until they meet, or everyone agrees that there's no agreement and goes home." This would otherwise be a comment, but I wish to share an image. A stock I happened to own, gapped up on the open to $9.20 and slowly worked its way down to $8.19 where it closed up 6% but near its low for the day.  This is an addendum to my comment above, warning about buying a stock on the open when news is coming out. Or more important, to be mindful of that news and the impact it might have on the stock. In this case, when the news came out and the stock had closed at $7.73, one would need to decide if he wished to buy it at any cost, or place a limit order.  I've redacted the name of the company, as this discussion has nothing to do with any particular stock, I'm just offering an example of the effect I warned about, three weeks ago. (Full disclosure, I got out at $8.70 in the first minutes of trading.) The purpose of a market order is to guarantee that your order gets filled. If you try to place a limit order at the bid or ask, by the time you enter your order the price might have moved and you might need to keep amending your limit order in order to buy or sell, and as such you start chasing the market. A market order will guarantee your order gets executed. Also, an important point to consider, is that market orders are often used in combination with other orders such as conditional orders. For example if you have a stop loss (conditional order) set at say 10% below your buy price, you might want to use a market order to make sure your order gets executed if the price drops 10% and your stop loss gets triggered, making sure that you get out of the stock instead of being stuck with a limit order 10% below your buy price whilst the stock keeps falling further.