Online Stock Trading Tips Stock Market Order Types And Uses |
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| By Carl and Michael | ||||
| Experts know there are 5 different types of order you need
to know about when it comes to trading stocks, and here is
the skinny on each type of trade: 1. Market Order. A market order is a request to purchase or sell a stock at the current market price. Market orders are pretty much the standard stock purchase order. It is important to remember that you do not control the price you will buy at, but normally you have a pretty good idea. Avoid this kind of order when there are few buyers and sellers. 2. Limit Order. This is an order that executes at a specific price that you set (or better) and can be open for a specific time period. While a limit order will prevent you from buying or selling your stock at a price that you don't want, if the price is way off base, the order will never execute. Some brokers charge an extra fee for limit orders, since sometimes these orders can fall out of range of trading, and just waste the brokers time. 3. A stop order. This is an order that says "do not do anything unless this happens...", so on a stop-limit normally you set it to sell your shares if it hits a certain low. In rare cases, people use stop buy orders, but they can be very dangerous. One your criteria is met, your order is executed at the market (no set price). 4. Stop-Limit Order. This is identical to the stop order, except for the fact that a limit order is triggered once your stock reaches a specific target price. 5. Trailing Stop. Basically, this is a stop order based on a percentage change in the market price. This information is going to come in VERY handy when you're mastering market stock trading, because the order type will determine how profitable you are. Simply put, some orders perform better than all the others in a certain market condition. For example, in October 1987 (Black Monday), stop limit orders caused many people to get caught with huge loses on their hands. When you start off, it is best to do some paper trading, and all the top brokerages let you set up training accounts where you can do online paper trading. Once you feel confident about your knowledge of each order type, and when to use them, you can switch over to a real trading account and know you have the skills to use the right order types effectively. It does not take long before you will be on par with the professional traders, who trade with the precise order type with every trade they make. And remember, these order types work in all markets, including shares, options, commodities and foreign exchange markets. |
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| Article Source: http://prenet.co.za | ||||
| About The Author Ready to master online stock trading yet? If you don't want to avoid headaches from technical analysis, grab these expert system stock trading tips. |
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