Make Winning Trades Using These 5 Order Types

If you are trading in the financial markets, either stocks, options, bonds, commodities, or foreign exchange, you need to master these five order types. Here they are, and how you should use them:

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.

One thing to keep in mind with a market order is the fact that you don't control how much you pay for your stock purchase or sale; the market does. This shortcoming can be met with a limit order.

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.

Sometimes your broker will charge a bit more for limit orders, since they can often remain unfilled, and it requires more of their time to monitor and process the order.

3. Stop Orders. A stop order is a market order that only gets activated if a condition is met. For example, the most common stop order is the stop loss, which opens a market sell order if the financial instrument trades at a certain price or lower.

4. A stop-limit order. This is just like the stop order, but with a set price. For example, you set a stop limit sell on IBM at 100. IBM drops to 100, and your "sell at 100" order is activated, but if IBM drops to 99 and continues to drop, your order may never be filled.

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.

That is because some order types do better in different market conditions.

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 each order type becomes second nature to you, you can switch to a real trading account with real money, and trade with confidence, knowing you have mastery over all the order types.

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.

More articles in this Category

1: How To Market On eBay 2: Internet Marketing-Which Rights Are Best? 3: EBooks- Golden Internet Marketing Idea 4: Online Membership - Hot Topic in Internet Marketing 5: Private Label Rights -Is The Expense Worth It? 6: Writing Your First e Book 7: Your Title Is Critical For Each eBay Selling Ad 8: Drop Shipping Business Dos And Don'ts 9: Looking To Sell Items On eBay? Why Not Try Dropshipping? 10: More Simple Steps To A Killer Sales Letter