What are the trades you want to make on the stock market? The experts advise starting small with less complex trades. Some types of stock trades, such as short selling, options trades and others take a little more expertise to pull off successfully. Depending on the current market conditions, the actual price at the execution for the trade might differ substantially from the price quoted. There are also limit orders, which will result in the trade only being performed at or above a predetermined price. By using limit orders, you can ensure being protected in terms of price, but you also run the risk that the trade will not be performed at all.
This kind of price fluctuation is especially common in very hot stocks such as IPOs. Initial public offerings commonly have rapid changes in price due to the very high volume of trading for a new offering. There are delays in quotes, since the trading is simply happening too fast for quotes to keep pace in real time. This has led many novice investors to pay a lot more than they had anticipated for a stock; this is why a limit order can be a very good thing, especially if you are new to the stock market.
You must understand the fast market environment to comprehend what can happen if you have not taken precautions. In fast markets, when lots of investors are trading and prices change quickly, delays can develop across the board. Executions and confirmations slow down, while price quotes lag behind actual prices. Online investors expect instant access to their accounts and instantaneous executions of their trades. In a fast-moving market, this is not possible.
The thing to keep in mind here is that the SEC has no rules in place as to the time frame in which a trade must be executed. Thankfully, firms which publish a speed they can be held accountable for exaggerating this figure or not informing investors in the event of delays.
If you want to ensure that your purchase or sale of a stock is only within a set price range, youll have to use a limit order. These differ from market orders, which come with no conditions attached and are a direct buy or sell order; they may be filled regardless of the current price of the stock. Buy limit orders are only executed when a stock is at or below a given price and a sell limit order only when the price is at or above the predetermined level.
Suppose youre interested in a fast moving IPO which was $9 at the initial offer. However, you dont want to pay above $20; in this case you would place a limit order to buy at or below this price. This will protect you from buying this stock at $75 and losing out when it drops. Keep in mind that if the market moves more quickly than your limit order can be filled, your trade may not be executed at all.
If you are unable to access your trading account online, find out what your other options are. Most online trading firms will also allow you to make trades by touch tone phone, by fax or the old-school method of simply calling a broker and speaking to them in person. Keep in mind that any events which cause a delay in online trades will similarly affect trades made through these alternate means as well.
Never make assumptions when it comes to your trades "plenty of traders have failed to confirm their orders and placed a second order, ending up with far more stock than they intended to buy. Talk to a broker at your firm and make sure you know how to make sure your order has been executed before placing another. - 16036
This kind of price fluctuation is especially common in very hot stocks such as IPOs. Initial public offerings commonly have rapid changes in price due to the very high volume of trading for a new offering. There are delays in quotes, since the trading is simply happening too fast for quotes to keep pace in real time. This has led many novice investors to pay a lot more than they had anticipated for a stock; this is why a limit order can be a very good thing, especially if you are new to the stock market.
You must understand the fast market environment to comprehend what can happen if you have not taken precautions. In fast markets, when lots of investors are trading and prices change quickly, delays can develop across the board. Executions and confirmations slow down, while price quotes lag behind actual prices. Online investors expect instant access to their accounts and instantaneous executions of their trades. In a fast-moving market, this is not possible.
The thing to keep in mind here is that the SEC has no rules in place as to the time frame in which a trade must be executed. Thankfully, firms which publish a speed they can be held accountable for exaggerating this figure or not informing investors in the event of delays.
If you want to ensure that your purchase or sale of a stock is only within a set price range, youll have to use a limit order. These differ from market orders, which come with no conditions attached and are a direct buy or sell order; they may be filled regardless of the current price of the stock. Buy limit orders are only executed when a stock is at or below a given price and a sell limit order only when the price is at or above the predetermined level.
Suppose youre interested in a fast moving IPO which was $9 at the initial offer. However, you dont want to pay above $20; in this case you would place a limit order to buy at or below this price. This will protect you from buying this stock at $75 and losing out when it drops. Keep in mind that if the market moves more quickly than your limit order can be filled, your trade may not be executed at all.
If you are unable to access your trading account online, find out what your other options are. Most online trading firms will also allow you to make trades by touch tone phone, by fax or the old-school method of simply calling a broker and speaking to them in person. Keep in mind that any events which cause a delay in online trades will similarly affect trades made through these alternate means as well.
Never make assumptions when it comes to your trades "plenty of traders have failed to confirm their orders and placed a second order, ending up with far more stock than they intended to buy. Talk to a broker at your firm and make sure you know how to make sure your order has been executed before placing another. - 16036
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