Online Stock Trade
Steps for Placing an Online Stock Trade
There are general steps to take when making an online stock trade. In today's article we discuss these steps for those stock investors who are new trading stock online.
1) Buy or Sell - Obviously, you would think that before you can sell stock you must buy it first. However, in your stock market trading system, you must first decide which is more profitable; to buy or sell shares of stock. You can actually short sell stock that you do not own.
2) Insert the Quantity - You must next enter the number of stock shares that you would like to either buy or sell. You can calculate what you can afford by taking the total amount of cash in the account and dividing it by the stock's last price.
3) Insert the Stock Symbol - The ticker symbol is selected or inserted in order to indicate the company in which you are going to buy or sell shares from. If you are unsure of the symbol then there is typically a way in stock trading systems to find out. There is typically some search functionality in this site.
4) Choose the Order Type - The next step for placing an online stock trade is to choose the type of order. The order can be a market order, limit order or stop loss order. Market orders are the typical order that tells the system to either buy or sell specific shares as soon as possible at the current market price. The limit order instructs the online broker to only buy or sell those shares that he or she can get a specific price for, or a better price. The last type of order is the stop loss order which combines the limit and the market orders. The broker will look at the orders and once the stock reaches a certain stock price, the broker is to sell the shares. Stop loss orders are just that, they are used to stop any further loss form occurring for those stocks that are declining in price. (That of course is for when you are going long when you place your online stock trade. Short selling is another story and there are stop loss strategies for this type of selling as well).
5) Choose the Price - The price is chosen for limit and stop loss orders.
6) Expiration, Routing and Special Instructions - These are advanced fields that are typically left to their default value. However, more experienced investors will manipulate the information in these fields.
7) Conditional Orders - This feature is especially helpful for those online stock investors who cannot be at their computer for the entire trading day. This feature places their online stock trade according to conditional orders for entry and exit trading strategies. This is also a feature used mostly by experienced investors.
8) Review and Place the Order - This is just as it sounds. Once you are finished you should see a summary of your order on the screen for you to review your selections before submitting. You also need to double check at this stage that you have enough funds in your account.
While online trading systems may vary, this should give you a general idea of what you expect when you an open an online brokerage account and begin trading. Of course you will need to adjust to whatever system you decide to use before placing any orders
DOW
NAS
There are times to take profits! There are times to close out positions when everything appears as if the signals are going to be created that would warrant closing that position. Our recent recommendation, HMA, produced that type of scenario today. In the early part of the day, it was trading well below the T-line, appearing like the recent tops were acting as resistance and the price had finally failed. That was time to take profits. However, the latter part of the day showed new strength coming into HMA. It came back up through the T-line and closed at a recent high.
How do you keep from getting whipsawed? How do you relieve your ego? Today's trading of HMA made for a compelling opportunity to close out the position during the day. What is a reasonable approach for taking profits when a candlestick sell signal had not been fully formed? Sell half the position. Two things can occur from the point of where you sold. The price can go down further to confirm the sell signal going into the close. Selling the other half of a position at that level allows an investor's rationale to say they sold some at a higher level and not all of it on the close.
On the other hand, if the price starts moving back up, the one half position can be bought back. What does this do to our emotional rationale? At least it can be explained that when we thought the prices were going down, we took off half the position but when it reversed and came back up, not forming a candlestick sell signal, we reestablish the position. If the price trend/pattern does continue in an upward direction after the lack of a candlestick sell signal, the price difference of where you sold and had to buy back at a higher price for a half position trade will not be a major loss of opportunity. Keep in mind, successful investing involves extracting "most" of the profits out of a trade, not every cent. There is nothing wrong with coming out of a position when the indicators/signals show that it is a high probability decision to sell, then buying back in when that sell signal has been negated.
Candlestick analysis involves the use of common sense investment decision making put into graphic depictions. The more you utilize the commonsense aspects of candlestick signals, the less you will be influenced by emotional decision-making which usually involves the wrong decision making.
Chat session tonight 8 p.m. ET - everybody is welcome. Click here for instructions. There are still very strong profits that can be made during a sideways moving market.
Good investing,
The Candlestick Forum Team
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