Order Type STOP or LIMIT

[Alec1974]

Dear Family, kill me but I cannot understand the difference between these 2 !

1. Let's say I have 50 shares of FB now, bought them at price $21.82 I want to make sure that if price goes, let's say below $20 I would sell it. What do i do ?

Choose action "SELL" and under Order Type choose "STOP
? What if i ll choose "LIMIT" instead, will it be the same?

2. Second question. Is this the only way? Buy stock first and THEN under order "SELL" choose STOP or LIMIT? Or can i do it right away when I buy a stock?

Soooo confused about "STOP LIMIT", "TRAIL STOP" and "TRAIL STOP LIMIT" as well. Could someone please show on my example, 50 stocks of FB, how it works?

Thank you,

Alec.

 

[DionysusToast]

STOP orders are generally used to execute at "worse" prices than current. So in the case of a buy, a worse price is a higher one and a better price is a lower one.

LIMIT orders are generally used to execute at "better" prices than current - letting the market come to you. So for a buy order, a better price is a lower one.

If you enter a limit sell order at a lower price than the current price, you'll get filled immediately, so make sure you don't use the right one.

In terms of Stop Limit - I'd ignore that for now.

 

[BataviaTrader]

this image i found helped me a lot (it still does sometimes to be honest, when im confused again )

 

[Alec1974]

Thank You Family. The last question. Do I have to buy the stock FIRST, and then get the Stop Loss. Basically make 2 transactions? Or can I buy the stock with the Stop Loss right away?

 

[BataviaTrader]

In order to make money you need to buy stock first and later on sell that stock at a higher price. Most brokers / trading platforms offer attached orders: so the initial Buy order, can have attached one or two child orders, all these are being sent in one go at the time of buying.

This can be a bracket order. The child orders are: a sell order below the Buy price (to function as stop-loss order), and another sell order, above the Buy price, to take your profits. Now ideally, your target order gets hit and you take the profit. If your trade does not work out, so get stopped out at your stop loss price.

I advice you to read up Day Trading Basics - Information for Beginning Day Traders

or get it at YouTube: youtube dot com/watch?v=4t7NuLZKB1s

[[i am not connected to scottrade in any way, just looking for a way to have it easily explained]]


Good luck
BT

 

[Alec1974]

Batavia. Wow. Great info ! Thank you, thank you so much, brother.

 

[Alec1974]

The last question about Stop Loss:

So if I bought FB at $20 on 08/14/14 and overnight it fell , and on 08/15/12 it opens at $16 and I had Market Stop Order at $18.75 my order would have gone through ? Does it work during hours when Market is closed?

 

[BataviaTrader]

it depends on how you input your order, it can be GTC (good till canceld, for swing trading or overnight) or DAY (which is openen and closed within the day).

 

[LiboNZT]

Glad there is someone else too confused with those terms. I find it difficult to understand how these orders work ( except the stop-loss and the one that locks into profits). Trailing stops are easy to understand. Can you set orders and only execute them when you are in the ''right'' side of the market? For example, current price 34 and I want to buy at 40. Is there any order configured as to buy when the market approaches the target from a lower price?

 

[BataviaTrader]

Glad there is someone else too confused with those terms. I find it difficult to understand how these orders work ( except the stop-loss and the one that locks into profits). Trailing stops are easy to understand. Can you set orders and only execute them when you are in the ''right'' side of the market? For example, current price 34 and I want to buy at 40. Is there any order configured as to buy when the market approaches the target from a lower price?

Yes that is possible, it is called a Buy Stop order.