Optimus handel29 comments
The best binary futures trading brokers in binary futures trading
One of the ways people use these advanced strategies is the utilization of different order types. Market orders are the simplest, most intuitive order types. A market order simply means that you want the trade to be executed immediately at the best available price in the market. If the market for a particular stock, ETF, or other security is liquid, market buy orders often get executed almost immediately at or near the ask price.
The advantage of a market order is speed. If you want in or out of a position immediately, a market order is the way to go.
The disadvantage of a market order is price. Depending on the size of the order and the number of available shares at the ask price, your order may not get the exact price you were hoping to get filled at. The other most common type of order is a limit order.
The advantage of limit orders is that you have complete control over the price at which a trade is executed. If the stock never reaches the limit price, the order will never get executed at all.
In a way, stop orders are almost a combination of a limit order and a market order. Much like a limit order, a stop order allows you to select a price at which the order will be triggered.
However, like a market order, once the order is triggered, it is immediately fully executed at market price. Stop loss orders are sell orders with a stop price slightly below the current share price of the stock. A trailing stop order allows the trader to set a stop loss price at a certain percentage or dollar amount below the current share price.
As the stock continues to rise, the trailing stop will rise along with it, maintaining the specified spread. However, if the stock falls, the trailing stop will remain steady until it is triggered. In addition to the three most common order types mentioned above, traders can also combine order types to execute specific trading ideas.
For example, a stop limit order can allow traders to buy or sell stocks only in a particular price range. A market If Touched order is similar to a stop sell order, except it is placed above the current share price rather than below it. These If Touched orders provide traders with another way to take advantage of large, short-lived swings in share price. So before you pull the trigger, take a second to consider which one is right for you.
This article is provided for educational purposes only and is not considered to be a recommendation or endorsement of any trading strategy. The author is not affiliated with Lightspeed Trading and the content and perspective is solely attributed to the author.
Navigating Taxes as an Active Trader. Large Cap Momentum Trading. Open an Account Try a Demo.