This is a quick post on how to place stock orders in general. There are many types and some special settings. The two most basic are Market Orders and Limit Orders.

If you want to buy a stock, you will typically select the account, enter the stock symbol, select Buy or Sell (or even Sell Specific). Then you are left with your price. If you go and buy a loaf of bread at your local Walmart, you will pick it up and take it to the register. You will then pay the MARKET price for the loaf of bread on that day. Prices change and stores change their prices with it. Prices at stores do not change very much or very fast. That is NOT true in the stock market. That is especially not true in the opening 15 of each trading day. I tend to refer to the opening 15 minutes as the waking shakes.

If you select a Market Order, you will get whatever price the stock is trading at that moment. This is used but you are better off, selecting the lowest price you are willing to sell or conversely the highest price you are willing pay. These are called Limit Orders. For sellers, your limit is the lowest price you are willing to sell at. For buyers, its the highest price you are willing to pay.

The market is volatile. Reduce your risk by using Limit Orders.

There is a risk in limit orders. That risk is that the order does not trigger. While in trading stocks, there are so many buyers and sellers, the only variable is your price. In stock options, it is a bit more complicated. I have sold some options in markets where there are so few buyers and sellers, that I had trouble buying and selling. This is known as liquidity or how easy is it to turn your investment back to a cash position.

Wrapping Up with Key Insights

That’s it. Short and sweet. Limit Orders are there for your protection. Market orders still have their place but use them wisely.