| robjackson |
|
Gold User, Member, TeleChart
|
| Registered User |
|
|
|
|
| Unsure |
|
| Saturday, February 26, 2005 |
| Wednesday, January 14, 2009 10:31:25 AM |
1
[0.00% of all post / 0.00 posts per day] |
|
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
|
|