Please DO NOT place orders based solely on these definitions. If you have any questions about how to place an order, please contact your local Schwab office or Schwab Technical Support.

BUY
Indicates you want to purchase a security. After a buy trade order is executed, the trade is then "settled" when you pay for the security by the settlement date.

SELL
Indicates you already own a security and wish to transfer ownership in exchange for money.

When you submit an order to sell stock the market activity, type of order, price limits and time limits you place on your order will determine if and when your order is executed.

Once your sell trade is executed, it is "settled" when you receive payment by the settlement date.

SELL SHORT
Indicate a "sell short" order when you want to borrow stock and sell it, with the understanding that you must buy it back later (hopefully at a lower price) and return it.

Example:
You sell short 100 shares of XYZ at $10 a share. Two weeks later you buy 100 shares of XYZ at $8 a share, give them to your broker and keep the $2 share difference as your profit.

You must have a margin account and you must indicate that the sale is a "short sale" at the time you enter your order. Only marginable stocks may be sold short, and only if the broker has shares available to lend.

Since the stock you sell is borrowed, the lender reserves the right to call back loaned stock at any time. Proceeds from the short sale, in addition to the applicable margin requirements, must remain in your margin account to ensure that the stock can be repurchased.

If you have any questions about short selling, or about the required deposit for a specific transaction, contact your local Schwab office, or our 24 hour National Trading and Customer Service Center at 1-800-435-4000.

SWITCH MUTUAL FUNDS
This is the action of selling shares in one fund and using those dollars to purchase shares in another fund. This includes both selling from one fund family and buying a fund in a different fund family, or selling and buying within the same family of funds. Please realize that when you switch money between funds, the sale could be taxable.

If you do not want your order entered at the Market price, you must enter one of the following price conditions: Limit, Stop or Stop Limit.

Buy orders will execute at the "Ask" price and Sell orders will execute at the "Bid" price. A security price can rise or fall, however, between the time you place the order and the time the order is executed. As a result, the current quote and your execution price may differ, particularly when trading securities with volatile prices, it's a fast market or if the stock is thinly traded.

Market orders entered outside of market hours may be executed at prices which significantly differ from the security's closing price.

Limit Order:
A request to Buy or Sell a security only at a price that you specify (the limit) or better. Execution of Limit Orders is not guaranteed, but if executed, the price you set or better is guaranteed. For comparison, see market order.

Place a Limit order when you're willing to wait for the price to move and risk that the order might not be executed.

Another use of a limit order is to control risk in a volatile market. For example, to make sure that you don't buy or sell at a dramatically different price than you expect, a Limit can be placed above the current Ask price on a Buy or below the Bid price on a Sell order. There is no guarantee of execution on a Limit Order.

Sell orders will execute at or above your limit and Buy orders will execute at or below your limit.

You may also place time conditions on a Limit order. See Time limits/conditions.

Stop Order:
Indicates a request to Buy or Sell at the market price, but only when the security trades at or past a price that you specify (called the Stop price). Once the stock price moves to or through the stop price, your pending Stop Order becomes a market order which guarantees execution, but not price. For comparison, see Stop Limit.

A Sell Stop is designed to protect a profit or limit a loss on a security you own. Sell Stops are entered below the current Market price. A Buy Stop Order is designed to help protect a profit or limit a loss on a short sale. Buy Stops are entered above the current Market price.

Sell Stop Example:
To protect yourself from losing too much if the market moves in the opposite direction of what you think, you could request a Stop Order telling the broker "if the stock goes as low as 40 sell my shares at the market."

The risk of a Stop Order is that it may be triggered by temporary market movements or executed at a price much higher or lower than the Stop price because of Market Orders placed ahead of it.

You may also place time conditions on a Stop order. See Time limits/conditions.

Stop Limit Order:
A combination of a Limit order and a Stop order used to protect a profit or limit a loss -- This is a request to Buy or Sell a security at a specified limit price or better, but only after the specified stop price has been reached or passed. Even if the stop price is triggered, a Stop Limit order guarantees the limit price, but not execution. For comparison, see Stop Order.

For a Sell Stop Limit Order, you must enter a price below the current Bid price and the Limit price must be less than or equal to the Stop price. For a Buy Stop Limit Order, you must enter a price above the current Ask price and the Limit price must be greater than or equal to the stop price. Note: You may choose to make your stop and limit prices the same as or different from one another.

Sell Stop Limit Order Example:
You enter a Sell Stop Limit Order at $25 when the stock price is at $30. Then the stock price drops to $25, your stop price is triggered and your order becomes a Limit order to Sell at $25. This means, if executed, that your stock would not be sold for less than $25.

You may also place time conditions on a Stop Limit order. See Time limits/conditions.

Order Price Comparison:
The comparison chart below illustrates one example of how order type and price may be selected in relation to a current market price (bid or ask).

Example: The current quote for Stock XYZ is: Bid 50; Ask 50 1/2.