May 15: The Implementation of Stock Trading Orders

by David Jenyns on May 15, 2007

Once you, the investor, has made the decision to invest via the stock market, there are several options in which you can participate in order to ensure that you do not suffer any great losses. These options are called orders which are decisions that you alone can make regarding your stock trading investment, or decisions that you choose to make after consulting the professional advice of your stockbroker. In order to effectively use the orders, you must know exactly what each order consists of, the advantages vs. the disadvantages, as well as, how to effectively place each one. In previous articles, the most common stock orders were explored and a general overview about each one was given.

However, it is extremely important to be as knowledgeable as possible about all stock trading orders in order to implement them correctly.

Let’s face it! When it comes to the stock market, there are millions upon millions of options as to stocks in which you are able to invest in. Obviously, with any type of investment, the goal should be to gain a profit, and in the case of the stock market, investors should aim to gain enough profit to live financially sound for the rest of their lives. If you are a first time investor, it is highly recommended that you go “shopping”, so to speak, for a stockbroker that is well educated about the stock market and the effects of orders that are placed on stocks. When you find a stockbroker in which you feel comfortable with, it is time to get down to the business of selecting the proper stocks that will effectively create the financial results that you want with your invested money. However, remember that stockbrokers are only humans, and because they are not all knowing, they are highly to make a mistake. But, not to worry, because if you are educated in stock trading orders, you will be able to repair any mistake made in stock trading.

Let’s say that you are a new investor who has just purchased 150 shares of stock from Wal-Mart. You did this because you enjoy shopping at Wal-Mart and, because you can never find a checkout lane that is empty, you assume that all Wal-Mart stores are constantly this busy. Therefore, you feel that purchasing this stock is a wise investment. Assuming that Wal-Mart stock sales for $1600 per share, your total initial investment is $240,000. Because you are a new investor, you are constantly checking the stock market to ensure that your stock is successful. However, one day, you check up on your Wal-Mart stock and notice that it has drastically dropped in profits. Your stockbroker has been less than helpful lately and you suspect that he is a scam artist. You are worried that you are about to lose all of your invested money, so you go into a panic because you have no idea what step to take next.

However, before initially investing in Wal-Mart stock, you should have become familiar with stock orders, particularly the trailing stop order. Had you have taken the time to learn that the trailing stop order allows you to set a price loss limit in order to reduce the amount of money that you lose. When you purchased the Wal-Mart stock, you should have placed a trailing stop order on your stocks because you could have decided that if your stocks got below a certain amount, they would automatically be sold to reduce your chance of losing your total investment. Therefore, before you purchase any stock with your money, it is a must that you educate yourself about stock trading orders so that you have barrier of protection over your money.

Basically stated, stock trading orders are simply little insurance programs that guarantee a return in profit pending that you know how effectively use each order. By implementing the use of stock trading orders, you are on your way to a successful investing venture that will reap profits on your money.

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