11.3 Order Types & Market Matrix (BLiSS vs SLoBS)
Order types control execution priority, pricing, and risk management. The BLiSS vs SLoBS mnemonic is the most valuable tool for solving Series 7 order entry questions.
Key FINRA Exam Takeaways
- Market Order: Executed immediately at current prevailing market price; guarantees execution, NOT price.
- Limit Order: Executed only at specified price or better; guarantees price, NOT execution.
- Stop Order: Two-step order; once the stop price is touched (triggered), it converts into a Market Order.
- BLiSS Rule (Below Current Market): Buy Limits and Sell Stops are placed BELOW market price; adjusted downward for cash dividends.
- SLoBS Rule (Above Current Market): Sell Limits and Buy Stops are placed ABOVE market price; NOT adjusted for dividends.
- Sell Stop: Placed below CMP to protect long stock positions against severe drops.
| Category | Order Types | Placed Relative to Market Price | Trigger Condition | Dividend Reduction? |
|---|---|---|---|---|
| BLiSS | Buy Limit & Sell Stop | BELOW Current Market Price | Executes when market drops | YES (Automatically reduced by dividend) |
| SLoBS | Sell Limit & Buy Stop | ABOVE Current Market Price | Executes when market rallies | NO (Not reduced on ex-date) |
Knowledge Checkpoint • Section 11.3
An investor owns 500 shares of XYZ stock currently trading at $68 per share. To protect against a severe decline in price while maintaining their long position, which order should the investor enter?