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SO YOU WANT TO TRADE ONLINE
TRADERS GETTING ORGANIZED
TRADERS LESSON ORDER TYPES
TRADERS LESSON ORDER ENTRY
TRADERS LESSON STOP ORDERS
TRADERS LESSON SELLING SHORT
UPGRADES AND DOWNGRADES
MARKET INSIGHTS
TRADERS LINKS 1
TRADERS LINKS 2
TRADERS LESSON TRENDLINES
TRADERS LESSON CHARTS and TA
TRADERS WORKSHEET
When To BUY and SELL
TRADING LESSON THE OPEN
TRADING STRATEGY EARNINGS
STOCK and MARKET NEWS
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| Traders lesson - order types |
| Brief recap overview of the most commonly used stock orders. |
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| MARKET ORDER - your order gets placed in line with everyone else, by the time your order gets processed it does so at whatever the stock's share price happens to be at that current time. Many times not at the price you intended. This can be particularly dangerous when your trading in volatile stocks that move quickly. * I do not recommend market orders, unless you've made a lot of profit already and are just looking to get out at any price. You should always try to execute all your trades using LIMIT ORDERS to both the buy and sell side ! LIMIT ORDERS- you specify the price your willing to buy or sell at. There can be many different situations to use limit orders a few examples are: Limit order on the BUY side- say the stock you are looking to buy closed at $ 89 yesterday. Now after reviewing the stock's chart, you notice the share price is close to it's 50 day moving average which is around 80. You also notice the stochastic's indicator has not quite reached oversold level. So at this point you feel there is still more selling pressure however it appears that it may get support at it's 50 day MA. So you place a Limit order to buy it at $80. ( the perceived support from the 50 day MA, many professional traders / institutional technical traders will bring in buying pressure usually around a stock's key MA's like the 13, 25, 50, 150, 200- (more on this in trading strategies) however there must be no negative news out there that could cause the stock to break down thru it's MA support.) If your order were to get filled you would imediately place a sell stop order to protect yourself against any downside risk. (more about this later) Limit order on the SELL side- you are looking to sell a stock but rather than sell at the market you notice on the stock's chart that buying pressure is still there. You see this from tech indicators Volume/Stoch/MACD. You feel the stock is over-extended however there seems to be a little more to run before there is any serious resistance. So you place a limit order to sell at somewhere in this upper resistance area tryin to maximize the stock's run and grab your profit before any pullback. resistance and support can be Moving averages, trendlines, or even a recent high) IMPORTANT NOTE REGARDING PLACING ORDERS WHEN THE S&P FUTURES ARE HEAVILY TO THE +/- PRIOR TO THE OPEN * Be careful not to place limit buy orders or market buy orders prior to the open when the S&P futures are heavily to the plus side, this will more likely cause you to end up buying near or at the high of the day. It's better to wait - even on the strongest of days the market will come back in a little giving you a more opportunistic time to execute an order. * Be careful also not to place a limit sell order or a market sell order at or prior to the open when the S&P futures are heavily to the downside, if you do you will end up likely selling at the low or near the low of the day. Again it's better to wait and let things settle out. even if the market continues to sell off, and you still want to sell , your likely to get a better price if you wait a while after the open. more on this in trading the open) BUY STOP ORDER - this is a order to buy a stock only if and when it reaches a specific price you set. Why? - your looking for a breakout point which might fuel the next run up in price. (ex. price above a key moving average 50, 200 or a break up thru a downtrend line signifying a change in trend. Stocks also tend to run after breaking new highs, so for example the stock's 52 week high is 49, you could place a buy stop order at 50. Just always be aware where overbought and oversold tech's are at.) ***Great startegy to use for trendline breakouts. Shorts also use buy stop orders to protect themselves in case their position goes against them. SELL STOP ORDER - Placed after you've purchased a stock. Used to limit any potential downside risk, you specify the price you wish your broker to sell at if your stock's share price were to start trading down. This protection method saves you from losses when trades go against you. (reminder do not place stop orders prior to the open, because regardless of the price you set you'll get executed at the open price. Prior opening or at the open are the only situation besides when a stock trading gets halted, that any order (limit/market/stop) be used with caution, it's better to wait evaluate then react. *there is a more indepth review at the TRADERS LESSON STOP ORDERS page* SELL SHORT - in simple terms you borrow shares from your broker to sell with the intent of repurchasing the shares at a later date for a lower price , thereby pocketing the difference. ( more on this in selling short lesson) FINAL note- in order for you to identify good entry and exit points and utilize order types to your advantage, you must aquire a well rounded knowledge level of both fundamental and technical analysis particularly the ability to read and interpret a stock's chart. I cannot stress this enough. |
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