Every trader must know in advance what orders he will use in stock market trades. Skills for entering and closing of any best online trade are very important.
Some brokers offer a lot of variations for buying, selling and selling shares short. Some trading software offers only limited basic options. The list of possible options and variants for entering and exiting of trades could be huge.
But I think that there is enough to understand only basic types of online orders like Limit and Market order. I personally use these two basic types in most of my trades for buying, selling and selling stock short.
But I have found also some additional parameters that can be used when I specify stock trading terms for any buy or sell in any internet stock trade. So it is good to have stock market brokers that offer good options in their stock trading software.
Watch what orders to use in stock trading
Entering the stock market 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 ticker symbol into my watchlist. A watchlist is a nice feature of my 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 shares are traded at 40. So, I set the alert to activate when the price reaches 39.50. Then, I have enough time to prepare the instruction 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 instruction for entry. I use BUY STOP instruction for longs or SELL (or SHORT) STOP version for shorts. This is set for a price defined in my trade setup and is valid for the current day only.
My broker software is set to produce an alert and notify me when the entry instruction is executed. Immediately after I know that my position is open, I enter a protective stop-loss nto trading software.
Stop loss and trailing stop
This type is known as a stop order. It’s a similar type of instruction to the one I use for entering the trade. When I have some trade opened from previous days, I enter stop instructions 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 version for the duration of the current day only. I enter my stop instructions every day since I monitor markets daily. For a short sell position I enter a BUY (or COVER) STOP version with a one-day duration only.
Exit from stock market 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 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 trading tips
I prefer to open position by stop market orders because they allow me to execute this action 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 version manually.
Use good trading software (like my broker’s software ) with an alert function. It will make your trading easier. Don’t be afraid to use Market order. 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.