SIE Orders and Trading
Updated October 27, 2026
Order types and trading basics come up throughout the trading part of the SIE. You need to know what each order does, when it executes, and how and when trades settle. Here’s what to know, followed by free practice questions.
Bid and ask
- Bid: the highest price a buyer is willing to pay. Investors sell at the bid.
- Ask (offer): the lowest price a seller is willing to accept. Investors buy at the ask.
- The difference is the spread.
Order types
| Order | What it does |
|---|---|
| Market order | Executes right away at the best available price; the price isn’t guaranteed |
| Buy limit | Buys at the limit price or lower |
| Sell limit | Sells at the limit price or higher |
| Buy stop | Placed above the market; becomes a market order if the price rises to the stop price (often used to protect a short sale) |
| Sell stop | Placed below the market; becomes a market order if the price falls to the stop price (often used to protect a gain or limit a loss) |
A limit order guarantees the price but not that it will execute. A market order guarantees execution but not the price.
Long and short
- Long: you own the security and profit if it rises.
- Short sale: you borrow shares and sell them, hoping to buy them back later at a lower price. A short seller’s potential loss is unlimited, because there’s no limit to how high a price can go. Short sales must be done in a margin account.
Settlement
Most stock and corporate bond trades settle regular way on T+1: one business day after the trade date.
Free SIE orders and trading practice questions
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An investor wants to buy a stock but pay no more than $40 a share. Which order should they use?Answer: AA buy limit order executes only at the limit price or lower, so the investor pays no more than $40.
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An investor owns a stock bought at $30, now at $50, and wants to protect the gain if the price drops. Which order fits best?Answer: CA sell stop below the market becomes a market order if the price falls to the stop price, helping protect the gain.
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Which order guarantees execution but not the price?Answer: BA market order executes right away at the best available price, so execution is certain but the exact price isn't.
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What is the potential loss on a short sale of stock?Answer: DA short seller must buy the stock back later, and there's no limit to how high its price can rise, so the potential loss is unlimited.
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A customer buys stock on a Monday with no holidays that week. When does the trade settle regular way?Answer: BRegular-way settlement for most stock trades is T+1, one business day after the trade date: Tuesday.
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A stock is quoted 20.10 bid, 20.15 ask. At what price can a customer buy it with a market order?Answer: CBuyers pay the ask (offer), so a market buy order would fill at about 20.15. Sellers receive the bid.
Pass the SIE exam on your first try
- All 228 questions across capital markets, products and risks, trading and accounts, and regulation
- An explanation for every answer, with the law or rule behind it
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