I would like to say that I really enjoy reading this board. I feel like I am getting such an education.
I have a question someone might be able to answer about minimzing risk. Do any of the current online brokers have a feature where you can purchase stocks and set it up where it will automatically sell if it drops below a certain amount, but not sell if it stays the same or rises? If yes, which brokers. I have search Ameritrade and Scottrades websites, but couldn't find any information. Thank you so much!
Beth
Posts: 3 | From: AZ | Registered: May 2005
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I have never used them (I need to learn to), but lowtrades offers stop and stop-limit orders for the same price ($5 max) as any other trade and they have a trailing stop order that you may only make by phone (makes it more expensive). I do not see any restriction as to which or what stocks they may be used with.
Posts: 11304 | From: Fort Worth, Texas | Registered: Mar 2005
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posted
Curious Girl, this site will introduce you to making use of "stop loss" orders. Information there is easy to read and does include four links to expanded information. Do read,
Some brokers do not allow stop losses on penny stocks, those stocks with a price under five dollars per share. Etrade was like this, but I think they have changed their policy to include all stocks. Check your online broker policy.
Clearly, I do not use stop losses. However I am not suggesting you do not. My circumstances are bound to be different than yours.
There are risks associated with stop loss orders.
A common risk is setting your stop loss too high, this is, too close to your current share price. A dip of five percent, ten percent, can trigger your stop loss and your shares are sold. You might have a stock which is volatile and will swing in price more than ten percent, which is not always a negative.
ALMI is an example. I have no stop losses for this stock because I want to buy more on dips in prices and, I expect AMLI to be volatile. Recent swings in prices were as much as fifty cents per share. That does not concern me as I know ALMI will continue an average upward trend into the future.
Had I set stop losses, ALMI would have been sold and I would not enjoy today's better profits.
A serious risk is there are those, which does include me, who will deliberately downtick a stock to trigger stop losses, then buy like crazy when those stop losses are triggered. Later, share price is driven back up by normal market forces.
General rule is to set a stop loss ten percent below your current price. You do need to keep track of your share price and adjust your stop loss as your share price increases; chase share price upward with your stop losses.
For those new to trading stocks, I suggest you do use stop losses. Any profit you can take is always a win. It does not truly matter if a stock continues on up, you have made a profit.
Contrasting that, if you do not use stop losses and your stock falls below your initial buy price, you have a real problem. Now you have to decide if to take a loss and run, or decide if your stock will go back up. Most stocks do not go back up.
Some stocks, as you know, will drop tremendously in the course of a single day. If you are at work or elsewhere and cannot watch your stock, use stop losses, always.
Curious Girl, it is always better to take a small profit and be safe, than to risk taking a loss. A small win is clearly better than a loss.
Stop loss orders are a very valuable tool. They also present risks. Best strategy is to learn all you can about stop loss orders, then make a well informed decision on when to make use.
Follow that link, follow the links found there. You will learn a lot and will be a better trader.
posted
This is exactly the answer that you are looking for:
-Market Order
Typically, a market order assures that your order will be executed, but does not guarantee a specific price. When submitting a market order, you are requesting that the order be filled at the best available price at the time the order is entered. However, in a volatile market, this can be substantially different from the price that was originally quoted.
-Limit Order
A limit order is an order to buy or sell a stock at a specific price or better. A buy limit sets the maximum price you are willing to pay, and a sell limit sets the minimum price at which you are willing to sell. Limit orders guarantee you a specific price, but do not guarantee you that your order will be executed. For example, you may wish to purchase a stock that is currently quoted at a $25 bid, $25.25 ask, but do not want to pay more than $24. If you place a limit order at $24, your order will only be filled if the price drops to $24 or lower and there are no orders ahead of yours. If it continues to trade at its current quote, you will not receive an execution.
-Stop Order
A stop order is designed to protect a profit or guard against loss. Although it does not work well in all conditions, it can be an effective protective strategy in certain situations. When placing a stop order, you specify a stop price that, when reached, converts your order to a market order. For example, you may have purchased a stock at $30 and it is now trading at $50. If it drops to $40, you want to sell the stock. You can place a sell stop order at $40, and if the stock trades there or below, your order becomes a market order to sell. The risk with this type of order is that once triggered, your order can be filled at any price above or below your stop price. For example, if a stop order is in place before the market opens, and the stock opens at $20, your order will be triggered and may be executed far below your original stop price.
-Stop Limit Order
A stop limit order is a variation on the stop order. It works in a similar fashion in that it is triggered once the stock hits the stop price. But instead of becoming a market order, it becomes a limit order at a price that you specify. For example, you want to limit losses on a stock that you purchased at $50, you enter a sell stop limit order at "$40 Stop $39 Limit." Once the stock trades at $40 or below, your order becomes a limit order to sell at $39. This will ensure that you do not sell at an extremely low price if a stock opens drastically lower. In this example, if the stock drops down at any price below your $39 limit, you will not sell the stock.
Correct me if I'm wrong but isnt it true that one cannot place a market or a stop order on a penny stock. One can only place a limit or a stop limit order on a penny stock?
Second question can one buy using a Stop Limit order or can that only be used when selling. Because you can sell and buy with a limit order but I cant visualize how that would work with a Stop Limit order.Posts: 71 | Registered: Apr 2005
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posted
the most common term is STOP/LOSS ... it protects your profits and limits your losses... another term is a SELL STOP ORDER ... some brokers have a TRAILING STOP LOSS ORDER that follows your stock up as it rises but when the stock goes down it doesn't move... i recommend the trailing one if your broker has it if not use the regular sell stop order and change it manually daily as your stock goes up... i use it all the time and always advocate it... and btw CHOICETRADE.COM allows you to put stop/losses on penny stocks...
-------------------- Let the world change you... And you can change the world.
Ernesto "Che" Guevara de la Serna Posts: 4669 | Registered: Mar 2004
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posted
Correct me if I'm wrong but isnt it true that one cannot place a market or a stop order on a penny stock. One can only place a limit or a stop limit order on a penny stock?
Second question can one buy using a Stop Limit order or can that only be used when selling. Because you can sell and buy with a limit order but I cant visualize how that would work with a Stop Limit order.
Posts: 71 | Registered: Apr 2005
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quote:Originally posted by ZJamaican: Correct me if I'm wrong but isnt it true that one cannot place a market or a stop order on a penny stock. One can only place a limit or a stop limit order on a penny stock?
Second question can one buy using a Stop Limit order or can that only be used when selling. Because you can sell and buy with a limit order but I cant visualize how that would work with a Stop Limit order.
Like i said Zjamaican.. it depends on your broker.. i use CHOICETRADE.COM and they let me use stop orders (or stop/losses as i call them) on Pennys... this seems to be in effect since they changed their platform and have a new one now...btw when i mean Penny Stock i mean any stock under $5 per share...
-------------------- Let the world change you... And you can change the world.
Ernesto "Che" Guevara de la Serna Posts: 4669 | Registered: Mar 2004
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posted
ive placed market orders dozens of times on penny's... through choicetrade... though i dont tend to do it anymore.. i use limit orders or buy stop orders nowadays.. any stock.. penny or otherwise.. OTC, AMEX, NASDAQ, NYSE .... etc...
-------------------- Let the world change you... And you can change the world.
Ernesto "Che" Guevara de la Serna Posts: 4669 | Registered: Mar 2004
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posted
Hmm, I have been told many times that one cannot place a market order on a penny stock. I have also heard that doing this is not a wise decission. When you say penny stock are you referring to any stock below 5 dollars or stocks traded on OTC.
Posts: 71 | Registered: Apr 2005
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quote:Originally posted by ZJamaican: Hmm, I have been told many times that one cannot place a market order on a penny stock. I have also heard that doing this is not a wise decission. When you say penny stock are you referring to any stock below 5 dollars or stocks traded on OTC.
yes, by most definitions. Brokers vary on stop orders and market orders, not on shorting. MMs can short pennies, we can Not. We saw market orders executed during the first Monday trading of f/s GVRP. Some went through below the .xxxx level, cause they sent a market order. The only way to know is get uo close and personal w your broker--perhaps repeatedly...often-times the branch office folks don't know
quote:Originally posted by ZJamaican: Hmm, I have been told many times that one cannot place a market order on a penny stock. I have also heard that doing this is not a wise decission. When you say penny stock are you referring to any stock below 5 dollars or stocks traded on OTC.
Yes Market Orders are not a wise decision unless some news came out and the stock is tanking over it and you need to get out now...and perhaps you misunderstood.. it's not that you "cannot" put a Market Order on a penny stock.. it is that you "shouldn't" put a Market order on a pennystock.. world of difference.. anyways Choicetrade allows Market Orders on Pennystocks.. and when i say Penny stock i mean any stock under $5 per share in any exchange which includes OTCBB(this one is OTC) , NASDAQ, AMEX and NYSE ...
-------------------- Let the world change you... And you can change the world.
Ernesto "Che" Guevara de la Serna Posts: 4669 | Registered: Mar 2004
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