Stock Markets Exposed
Stock market investing question?
Can someone explain this to me? “I want to BUY 100 shares of the symbol ???, at a limit price of $91.20 or better. “Then, I want to place an order to SELL ALL of my shares of symbol ???, at $85, STOP. This order is good till canceled.” The option for the Order menu are: Select,Market,Limit,Stop and also Stop Limit, What is the difference between "Stop" and "Stop Limit" Any and all advice is welcome!
Public Comments
- check this out, http://www.investopedia.com/ask/answers/04/022704.asp Good Luck
- It sounds like you are placing an order with a live broker -- as you know, all your trades are recorded in case there is a subsequent dispute. In stocks, there are two types of orders: a market order (you get the trade you want but you don't know the price) or a limit order (you get the price you want but you don't know if you get the trade). Now, if it's not a market order, then it must be a limit order. > at a limit price of $91.20 or better That means you want to buy the stock at a price of 91.20 or lower. When you use "or better" you are willing to accept a lower price. > at $85, STOP A STOP is a limit order that can become a market order. When the price hits (or goes through in the case of a gap, i.e. the stock price is below your STOP price) your STOP order will be executed as a market order. A STOP is commonly referred to as a stop-loss order and is used to protect the investor on the downside who doesn't want to follow the market periodically. > good till canceled Also refer to as GTC meaning the order stays in effect until you cancel it -- this saves you from placing the same order each day. In contrast, some orders are "good for the day" meaning if the order isn't executed by the end of the day, it automatically expires. You don't have these problems with market orders because they immediately get filled (but again, you don't know what price you got, which is the trade-off)/ > What is the difference between "Stop" and "Stop Limit" Stop is a limit order that becomes a market order and is helpful when a stock gaps down. A Stop-limit means that the STOP order remains a limit order and will not get executed until you get that exactly that price. Here's an example to help you: You have 500 shares of XYZ that you bought at $50 and the stock is now at $90. You place a STOP order at $85 to lock in your gains in the event the stock declines. XYZ reports bad news and the stock gaps down to $82 at the open. Under a STOP, your trade is executed because the price is below your STOP price and you get out at $82. The news is so bad XYZ closes at $70 at the end of the day but your STOP order saves your rear when you got STOPPED out at $82. In contrast, if you used a STOP LIMIT order at $85, you still own the 500 shares at $70 at the end of the day because the stock never traded at exactly $85. So why do people use STOP LIMIT orders? It has to do with getting confirmation at specific prices, i.e. in conjunction with technical analysis, etc. If you want protection against unfavorable downside events, use a STOP and not a STOP LIMIT order.
- Sounds like you're on a broker website about to make a trade. Best thing is to check the definitions available there, or just call their 24 hour 800 number for live help on the explaination.
