Ideal orders for stock trading

Every trader must know in advance what orders he will use. Skills for entering and closing of the trade are very important.

Some brokers offer a lot of variations of orders. Some stock trading software offers only some basic types.

I like trading with my broker’s software. It has a lot of options to enter or exit from the trade.

I use these techniques for opening and closing the trade.

Entering the trade

My work starts before any trade is entered. When my trade setup is prepared and I have my entry , stop and target points, I put the stock symbol into my watchlist. A watchlist is a nice feature of my stock broker’s trading software.

Then, I set the alert for every symbol I have entered. This alert has to signal the price is approaching the defined entry level for this particular stock. The alert should work some time before the defined entry point is reached.

Here’s a stock alert example: I want to enter a long trade when a stock is traded at 40. So, I set the alert to activate when the price reaches 39.50. Then, I have enough time to prepare the order for entering the trade.

I wait for the alert to notify me that some action is required. I do not enter any trade during the first 5 to 10 minutes. I wait until the price settles after the first 10 minutes of a trading day. If my price entry is triggered during first 10 minutes, I do not enter the trade. Also, if the price has a gap during opening time, I prefer not to enter the trade.

When everything is going well and I receive info from the alert, I set an order for entry. I use BUY STOP order for longs or SELL (or SHORT) STOP order for shorts. This order is set for a price defined in my trade setup and is valid for the current day only.

My trading software is set to produce an alert and notify me when the entry order is executed. Immediately after I know that my stock trade is open, I enter a protective stop-loss order.

Stop loss and trailing stop

This type of order is known as a stop order. It’s a similar type of order to the one I use for entering the trade. When I have some trade opened from previous days, I enter stop orders for these trades after the first 10 minutes of trading. When a gap occurs, then simple gap rules must exist to know how to handle such a situation.

When I’m in a long trade, I enter a SELL STOP order for the duration of the current day only. I enter my stop orders every day since I monitor markets daily.

For a short trade I enter a BUY (or COVER) STOP order with a one-day duration only.

Exit from trade

You don’t need to do anything special when you’re using a moving (trail) stop strategy . You’re waiting for a breaking of this stop level by price. Then, exit from the trade happens automatically.

I use fixed value price targets. I’ve set an alert to notify me when the price reaches values near my price target. In such a case I monitor the situation closely. When the price target is reached, I use a Limit or Market order to get out of the trade. When I have more targets, I close part of my position, one half as a minimum, but preferably two-thirds. For the rest I use a trailing stop strategy.

My special stock market trading tips :

I prefer to enter trade by stop market orders because they allow me to trade quickly. Breaks of support or resistance can be very quick, and the price can move too far from the entry point if I’m waiting to enter a Limit order manually.

Use good trading software (like my broker’s software) with an alert function. It will make trading easier.

Don’t be afraid to use Market orders. I select only liquid stock for trades so the market orders will provide good entry and exit values. One, two or five cents does not matter.

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