Registered User
Joined: 8/15/2006
Posts: 1
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Rookie question here.
In their introductory video, TechniTrader says you should "never place a market order" and "never place a limit order".
They say you should place a specific type of order that will only put you in the stock if it starts to move upward. Anyone know what type of order they are referring to?
If so, will most online brokers accept that type of order?
Thanks in advance.
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Registered User
Joined: 10/7/2004
Posts: 264
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I have no clue what they are talking about. Orders are either at the market at whatever is bid/ask or limit at a price you specify. There are many variants based on these types of orders with stops, conditions, etc. You may want to check with your broker to see which types of orders they handle.
My best guess is that they are talking about a buy stop order. That can be set at the market or a limit price. The order will execute only when price moves up thru your stop level. Good luck.
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Registered User
Joined: 10/26/2005
Posts: 238
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If I remember right they are suggesting using a BUY STOP order.
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Registered User
Joined: 1/28/2005
Posts: 6,049
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"Never" is a very strong word. I use market orders all the time. It all
depends on what you are trying to do. A daytrader may have different
requirements than someone who will hold a stock for months.
Check with your brokerage firm on all the types of orders they allow. I'm
sure they will have some you never used or heard of.
Thanks
diceman
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Registered User
Joined: 2/26/2005
Posts: 1
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A buy-stop order is certainly what they were referring to. Many traders use a two pronged approach to their trades.
First they look for a setup, which is a set of condition they want to see in a stock. For instance, it might be the stochastic indicator moving up through 20.
Next they will set a buy stop order just above the high of that day. If the stock then trades above that price, the stop order essentially becomes a market order, and is executed. In this way, they only buy the stock once they have confirmation that the upward trend will continue. At least they hope it that it will. Of course you could also just buy with a standard market order, it all really depends on what you feel comfortable with.
The other fear some traders have with market orders is that the bid/ask spread could be enormous and you may get a lousy execution. This is especially true in non-specialist markets like the NASDAQ. For instance, with thinly traded stocks, you could see a stock that closed at $7, open in the morning with a bid of $6 and an ask price of $8. Going in with a market order before the open, you could get executed at $8. Ouch!!
Hope this helps a little.
rob
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Registered User
Joined: 10/7/2004
Posts: 2,126
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robjackson is completely correct in its explanation.
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Registered User
Joined: 10/7/2004
Posts: 2,126
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One more thing each type of order has a time and manner to be used. It is up to the trader to properly assess the situation and to use the appropiate order at the appropiate time. Per example your stock is falling off the sky in panic - you will never get out at limit, unless you set it much, much lower that the market price at that particular moment (if you ever seem level III scrolling in that kind of situtaion - you know the implications of that); so your best shot there is to get out at market.
Another example - the stock is shooting for the stars and you want to ride the train - you better off paying the ask (at limit) to get in. It just depends on the situation. If you are a daytrader you must quickly react with the appropiate kind of order.
good luck
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Registered User
Joined: 3/7/2006
Posts: 244
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All good advice. I do use market orders on occasion. If the stock is an index or well traded stock, AND you trust your broker market orders have their place.
As stated above, NEVER is a strong word.
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Registered User
Joined: 1/28/2005
Posts: 6,049
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Just another thought that popped into my head.
I would be willing to bet most new traders who have failed. Have lost money
due to one of the following:
Trading from emotion.
Lack of discipline.
Not reading and learning as much as they can.
Not studying past trades.
Thinking some indicator is the holy grail.
Diversification.
Not using stops.
Not using risk control.
Fighting major trends
Fundamental stock quality.
Trading without a plan.
My guess would be. There are very few who have failed. Simply because
of the type of order they placed.
Thanks
diceman
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Registered User
Joined: 8/25/2006
Posts: 2
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I’m currently taking the Technitrader course and am in the paper trading phase. The type of order they are talking about is the “buy, stop, limit” with an Order Submits Order (OSO) for a stop loss. The order is submitted after hours for execution at the open of the next trading day. An online Broker that handles that kind of trade is myTrack.com. Example: The stock I want to buy closes for the day with a high of $50. The order says, buy if the stock goes above the high plus ¼ point ($50.25), but limit the order to 3/8 of a point above that ($50.635). That is, if the stock shoots up at market open above $50.635 before my order can be processed, don’t buy. If the stock stays within the limits I have set and the buy is executed, then immediately enter (OSO) a stop loss at the price I’ve specified (say, $48.50).
I would like to hear from anyone else out that is using or has tried the TechniTrader system. Thanks
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Registered User
Joined: 12/8/2004
Posts: 213
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Best to have access to "Total View" on NASDAQ and use only market orders.
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Registered User
Joined: 12/8/2004
Posts: 213
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P.S.
Best to trade a stock whose price action you have followed on the five minute chart for at least 2 weeks. 1 month is better and the longer the better.
Also you need to understand what is going on with the company and understand the current daily volume vs the stocks historical trading volume.
If you want to be successful trading, best to pick out no more than half a dozen stocks with high betas and master their trading patterns well. Once you have learned them then you should be able to do well trading.
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Registered User
Joined: 12/8/2004
Posts: 213
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P.P.S.
Never trade in a stock where your trading activity will move the price up or down.
There are a lot of reasons for this, but he bottom line is that if your trades move the price then you wind up paying more to get in then you should or you won't get all the shares that you want and you wind up getting a lot less per share to get out.
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Registered User
Joined: 3/25/2005
Posts: 864
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I always follow the conventional wisdom on this one which says you should always enter the trade on a limit order and exit the trade on a market order.
You enter on limit so that you get the price for the stock that you are willing to pay for it. You do this by paying attention to the current bid/ask price and bid/ask sizes. You would then enter the trade on the current bid or ask using a limit (depending on whether you are shorting or buying). My trades almost always get filled this way unless a) the bid or ask changed before my order was able to grab the current quote or b) the current size of the bid or ask was too small for the # of shares I was attempting to grab.
In order to keep "a)" above from occurring, you can enter your limit order for shorts at about .10c above the current bid (for longs, enter limit at about .05 below the current ask). This says that you want to Short (or Buy) at or better than the limit price you specify.
Though it is true that you will pay more in commissions with limit orders, you control the price you want to pay for the stock. With market orders, what you pay for it is out of your control.
Now, when your stock nears or surpasses your target price, you can save yourself a little commission money by just exiting on a market order i.e. you don't need to be as careful exiting your position when your approximate target price is reached because regardless of anything at this point you are going to make close to, more than or, right at the profit you seek.
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Registered User
Joined: 5/17/2012
Posts: 106
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QUOTE (diceman) Just another thought that popped into my head.
I would be willing to bet most new traders who have failed. Have lost money
due to one of the following:
Trading from emotion I become emotional when i follow rules.
Lack of discipline. is discipline following rules
Not reading and learning as much as they can. live and simulated trading is the best learning
Not studying past trades. I remember memorible counter moves
Thinking some indicator is the holy grail. I don't have that problem
Diversification. I don't diversify but I keep most of my money in cash
Not using stops. I haven't been using stop but may to prevent catastrophic loss
Not using risk control. I completely reject risk control and force myself into risky behavior
Fighting major trends pathological fear of fakeouts my biggest failure
Fundamental stock quality. Is Chipotle 40 times better than Bank of America?
Trading without a plan. My plan is aggresion and reaction
My guess would be. There are very few who have failed. Simply because
of the type of order they placed.
So far i am not a successful trader
Thanks
diceman
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