Understanding stock trading can seem challenging, but with the help of EuropeFX, you can be well on your way to trading like the pros. The first step is to learn about the types of trades you can make with a broker. These include stocks, mutual funds, bonds, and exchange-trade funds. However, the next step is also to learn about the types of trading, such as limit orders and market orders.
The most common stock trade is the market order. They tell the broker that you want whatever price is presented when you make the order. They usually incur lower commissions because they’re simple to execute. However, your costs can fluctuate between the time you call to place it and the time it takes the broker to complete it.
Limit orders ensure that you can limit the minimum or maximum price you pay when buying/selling stocks. The difference between these and market orders is that the stockbroker can’t guarantee the limit order is going to get executed. If the minimum/maximum price is never met, the order doesn’t get executed at all.
All or None
Usually, purchasing a significant amount of common stock from one company means that the broker has to fill the order over many hours or weeks. This is good for some things because it means you don’t increase or decrease the stock price significantly when you flood the market with a large order.
However, sometimes, you do want to place a big order at a single price, so you create an all-or-none trade. That tells your broker that you only want the trade if he can do it in one transaction.
Stop and Stop
Stop and stop orders are called stop loss orders because you can lock the profit in from a profitable trade. While most investors don’t use them, they can be helpful when you’re beginning.
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