Hot Stock Picks And Their 5 Winning Order Types

Experts know there are 5 different types of order you need to know about when it comes to trading stocks, and here is the skinny on each type of trade:

1. A market order. Market orders are orders to buy stock at whatever price is available. In a fast moving market, these get filled (sold to you) at pretty much the price you expect.

Since the price you get (or pay) is unknown, you should have some risk tolerance for this order type. Luckily in strong fast moving markets, market orders are one of the only ways to ensure you get in or out of the market.

2. A limit order. Limit orders are orders to buy or sell at a particular price. This is good if you really need to get the price you specify, or if the market is choppy - moving up and down too fast to keep up with, but you don't want to get caught on a sudden change in market direction.

Sometimes your broker will charge a bit more for limit orders, since they can often remain unfilled, and it requires more of their time to monitor and process the order.

3. Stop Orders. A stop order is a market order that only gets activated if a condition is met. For example, the most common stop order is the stop loss, which opens a market sell order if the financial instrument trades at a certain price or lower.

4. A stop-limit order. This is just like the stop order, but with a set price. For example, you set a stop limit sell on IBM at 100. IBM drops to 100, and your "sell at 100" order is activated, but if IBM drops to 99 and continues to drop, your order may never be filled.

5. A trailing stop order. This is an order that is dependent on the current prices. Usually it is used to lock in profits after some have been made, while letting you ride the trade for even better profits. For example, a trailing stop at 10 below market means if the stop ever drops 10 from its most recent highs, your market order to sell will be activated.

This information is going to come in VERY handy when you're mastering market stock trading, because the order type will determine how profitable you are.

Knowing these order types will be very important as you learn to master trading, since each one has significant benefits in certain market conditions.

To get up to speed on these order types, be sure to practice trading without real money, and get used to trading and seeing which order type performs best in each market condition.

Once each order type becomes second nature to you, you can switch to a real trading account with real money, and trade with confidence, knowing you have mastery over all the order types.

Before long, you will be a professional, who knows all the trading indicators and order types, and able to navigate the strong waters of stock, option, and currency trading, like you were born into a family of stock brokers.

About the Author

Proven effective online stock trading is just a click away. Don't be on the losing side of your trades - just watch how these stock trading tips have proven to win time after time.

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