| Understanding Buy and Sell Order Types |
When you first open a paper trading account, you're often excited and eager to place a trade. But many traders immediately become confused by the various order types available to them when they want to buy, and later sell. We break them down here.
Please note: You should NEVER, EVER place a trade in the live market before you understand these order types. In fact, until you've developed a trading strategy, and paper-traded it extensively, you should never jump into the live market. So many traders have lost everything because they failed to plan and practice.
Market Orders place your trade immediately A market order is a trade-execution order you submit to your broker instructing him that you want to buy or sell the stock you are watching at whatever the going market rate is. Market orders are typically filled immediately. Watch a video further explaining Market Orders Limit Orders let you name your price A limit order is a trade-execution order you submit to your broker instructing him that you want to buy or sell the stock you are watching at a specific price. Your broker will only fill the order if he can do so at your requested price, or better. Limit orders can be filled immediately but may be delayed or never filled at all if the stock price doesn't ever reach your limit price. Watch a video explaining Limit Orders
You can also read about the less-used Good 'Til Canceled Orders and Day Orders. Stop Loss Orders Provide Protection A stop loss order is a trade-execution order you submit to your broker instructing him that you want to exit the trade you are in if the stock price reaches a specific price. Your broker will only take you out of the trade if the stock price reaches the price you designate.  After you watch the video above, be sure to read about Determining Where to Set A Stop Loss. For another Stop Loss strategy for advanced traders, read Trailing Stop Loss Orders.
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3.25 Copyright (C) 2007 Alain Georgette / Copyright (C) 2006 Frantisek Hliva. All rights reserved." |
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