1 Decision You Need To Make Before Making A Trade

Before you make a trade, you need to place an order. But there are many different types of stock orders.

Which should you choose?

To make smarter decisions as an investor, it’s important to educate yourself on the different types of stock orders.

Knowing and understanding the different stock order types will not only help you determine when each one is appropriate, but it can actually help reduce losses and potentially improve profits.

In this article, I’ll cover some of the key types of stock orders, and how they can best be used to maximize your trading potential.

What are Stock Orders?

Before we go into the different stock order types, let’s just take a sec to define what a stock order is…

Basically, a stock order is your instructions to the broker to how you want to buy or sell a security.

However, there are many specifications that can be put on that order. Think about it like going to the coffee shop, where you can ask for soy milk, light foam, or assign any number of different personalizations to your latte. Only here, you’re tailoring it to your investment needs.

There are different order types which let you as the investor place restrictions on the order which can have an effect on the price, and the time of the order placement.

By choosing the appropriate order type and adjusting these restrictions, you can try to control the profit and loss on the transaction.

In some cases, you can adjust the settings so that the order will only be placed if it fits certain criteria that you have set.

Now that you have a basic understanding of stock orders, let’s dig deeper into some of the considerations you’ll keep in mind when choosing one.

Time Horizon

While it might sound like a sci-fi movie title, time horizon is actually a stock market term, and it’s relevant to stock order types.

Time horizon is the amount of time you’re holding an investment before you liquidate it.

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