Stop orders are very critical in the stock market. It can help you to limit your losses when you are wrong and keep your gains when you are right. Many new investors will fail because they do not utilize this order.
So what is a stop order? Well a stop order is an order that you place whenever you are in a stock. It tells your broker that if the stock gets to a certain point, sell my stock. So why should you use it?
1. Limit Your Losses
The most important part of trading is limiting your losses. If you lose all of your money on 1 bad trade it doesn?t matter how good of a stock picker you are. You need to have at least some money to make money from it.
Another great reason why limiting your losses is a good idea is because the less you lose when you are wrong the less often you will have to be right to make money in the market.
So how do you use stop orders to limit your losses? Well you simply place the order to sell the stock at a lower price. For example if you buy a stock at $20 and you feel like it is a good buy unless it dips below a support level at $18 you could put a stop around $17 and that way if it does fall lower you will get out at $17 for a small loss instead of waiting for it to $!6 or $15 and beyond.
2. Keep profits
Have you ever bought a stock watched it shoot up then watched it fall down and you lose all of your profit? It happens. Well a stop order can help you.
Now say you buy that same $20 stock but instead of going down it goes up to $35. You may decide you do not want your stock to fall all the way down. Instead you want to keep some of your profit.
So instead you put a stop at around $30. Now if the stock falls you sell at $30 and keep the majority of your profit. If it goes up you can still profit from the rising price of the stock.
For more orders visit http://www.stocks-simplified.com/stock_orders.html
A share of stock represents a fractional ownership stake in a
business corporation. Corporations issue stock in order to raise money
for their business operations. Individuals and organizations that buy
this stock become part owners of the business. The more stock one
purchases the greater the fraction of the business one owns.
the purchase of stock an investor assumes the rights and
responsibilities of a part owner in the business no matter how small his
stake in the business. One of those rights is the right to elect the
board of directors. The board of directors oversees the operations of
the company. They are also responsible for selecting the Chief Executive
Officer (CEO), who runs the day to day operations of the company and
reports to the board. Investors also have a right to receive dividends
if dividends are declared. The amount of dividends an investor receives
is based on the amount of stock they own. Companies declare dividends as
a way of sharing profits, but they are not obligated to do so.
would one invest in the stock of a company? The primary reason that
investors invest in stock is they hope to sell their stocks for a higher
price than they bought it for. Hence the popular saying, buy low, sell
high. Some investors also invest in stocks in order to earn a steady
income from regular dividend payments.
Stocks can be classified according to certain investment characteristics that they posses.
of high quality corporations that maintain a leadership position in
their industry are usually classified as BLUE CHIP stocks examples
include Microsoft, IBM , Coca-Cola, Wal-Mart. These stocks are generally
considered safe investments and are favored by cautious investors.
that pay a high portion of their profits as dividends to investors are
termed INCOME stocks. They are sought out by investors who want to earn a
steady income stream from their investments. Stocks of Public utilities
are good examples of income stocks.
Stocks that move as the
economy moves are referred to as CYCLICAL stocks. When the economy
experiences a downturn they do poorly and when the economy is booming
they do great. Examples of such stocks are auto industry stocks, steel
stocks and industrial chemical stocks.
that are immune from the general economic condition are known as
DEFENSIVE stocks. These stocks are not seriously influenced by what is
going on in the general economy. Good examples of these are grocery,
alcohol and utilities stock. The demand for their products and services
remains constant in good or bad times.
Stocks that are expected to
report higher than average earnings and sales revenues and reinvest
most of their profits are often classified as GROWTH stocks. Growth
stocks are often highly sought after because their stock price tends to
rise quickly. Growth stocks can be found in any sector, but they are
usually found in the technology and pharmaceutical sectors. Eventually, a
growth stock will stop growing at an above average rate. Examples of
past growth stocks include Microsoft, Cisco systems, Genentech,
Starbucks and McDonalds.
Investors looking to buy or sell stocks
simply contact their broker, and then place an order for a specific
amount of stock. The broker then states the bid price- the highest price
buyers are willing to pay for a stock- and the ask price-the highest
price sellers are willing to sell a stock for. The investor then decides
whether to place a market, stop or limit order. A market order
instructs the broker to buy or sell at any available price and its
executed immediately. A limit order, on the other hand, is an order to
buy a stock at no more, or sell a stock at no less, than a specific
price, within a specific time limit.
A stop order much like a
limit order, is only executed when a price is reached, the difference
being that a stop order becomes a market order when that price is hit
and the order is executed at whatever available price. So if an investor
with a stock worth $90 places a stop order to sell at a price of $80,
once the price of the stock drops to $80 ,the order becomes a market
order and then the trade is executed at the best available price. Once
the trade is executed the broker then provides confirmation to the
investor. Most trades are usually executed in less than a minute.
Stocks continue to outperform all other forms of investment and will continue to remain an integral part of the U.S financial system.
Visit Stock Market Investing to learn more about the stock market and investing in stock.
There are not many listing requirements to trade on the OTCBB. Over the
counter is nether a stock market nor a stock exchange. Therefore to
become listed or remain listed the requirements are minimal. If a
company does not meet the minimum requirements, they move from the penny
stocks to the pink sheets. OTCBB companies must file with the SEC to
remain in good standing and must continue to file on time or they will
be moved to the pinksheets. Companies that can not remain current become
delinquent. The symbol “E” is added to these delinquent companies trading symbols.
There is a 60 day grace period where the company can regain its status
as a reporting company and have the “E” removed from the symbol. After
this period, the company is delisted.
“Pump and Dump” schemes are
frequently committed on the OTCBB exchange. This scheme involves buying
low priced over the counter stocks, running up the price of the stock
without reason and then selling those shares to unsuspecting investors.
There are many methods used to drive up the price of an OTCBB stock. The
most common method involves forums. There are many penny stock forums
where trader gather to discuss stocks. OTCBB stocks are priced anywhere
from 5.00 to under a penny, with some trading as low as.0001, these
stocks can run up hundreds to thousands of percent in a day. These large
runs are not uncommon and the forums are full of traders waiting for a
stock to run. The criminal element, then buys a large amount of shares
at a low price and begins to push the stock through the forums driving
up its price. At time companies are also involved and pay for
“promotions” of the their companies so they can sell their shares at a
only does a micro cap trader have to worry about companies profiling
their stock for gain, the forum hot stock picks that push up the price,
but they also have to worry about insider fraud. The best way to trade
the OTCBB stock is with knowledge, taking the time to read the SEC
filings, calling the transfer agent to learn about the share structure,
and contacting the companies investor relations department. Even when
you complete all these steps and feel comfortable about the company, you
watch the chart and buy at what you feel is a good price, you can still
be the victim of fraud.
Many times insiders garner control of the
companies shares, they issue press releases touting how great their
company is and what a great future they have. The company shows a solid
share structure but behind the scenes, the insiders are diluting shares
while planning on filing later or filing falsely. Then as the price
skyrockets they “dump” the shares into the market. No one understands
what happened but all the investors are left with nothing. This happens
very often when trading OTCBB stock. If the fraudsters are not caught
they will file for a reverse split, removing most or all of the shares
they just dumped from the market while creating a nice looking share
structure for the company. Then they file for a name and symbol change
while planning to commit fraud again. These are no small time crimes,
some of these scams rake in millions of dollars.
consist of penny stocks, the grey sheets, the pink sheets, micro cap
stocks, nano cap stocks, small caps etc… you can make money trading
these over the counter stocks you just need to be careful and do your
homework! (Possible big on Penny Stock VNMC $0.3 on Jan. 12, 2015) www.quirpo.com Share N Build $$$ Betters Bet