Learn How to Make a Stock Trade
At one time, if someone wanted to trade stocks, he had to find a full service broker and set up a consultation. If that aspiring trader wanted to trust the stockbroker to manage his portfolio, turning his money over to the stockbroker and hoping he made the right choice.
Today, it’s a whole new world and you can learn how to buy stocks on your own. Thanks to the Internet and sites like E*Trade and TD Ameritrade, investors can set up trading options from anywhere, having as much or as little control over their trading decisions as they choose.
Just like traditional brokers, with an online broker, it all starts with an order. You, the customer, order the stockbroker to buy, sell, or trade for you. The different types of orders can be daunting if you’ve never heard the terminology before, but by understanding what the terms mean, you can better work with your online broker to find success on the stock market.
When a customer requests a Market Order, he is simply requesting that the broker buy or sell at the current market price. These are the most common order type used in stock trading. This option simply says, “I want to trade now” and your trade is made, with no regard to the current price.
A limit order occurs when you, the customer, command that a stock be traded at no more or less than a set price. By doing this, you ensure that your money is spent the way you want it to be spent. However, limit orders are only executed when the price falls in the right range, meaning often you might not see an order executed at all.
Also called a “stop loss order,” a stop order is a command to sell if a stock reaches a certain price. Once the stock hits that particular price and a stop order is enacted, that stock becomes a market order stock, being traded at the current market price.
Because all of these things are electronic with online trading, you have control over your money. If your trade is entered with a limit order, for instance, once a stock reaches a certain price point, specified by you, your instructions will be carried out. This feeling of control has given traders new confidence in stock trading.
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