Though the active and closed status of trade is the same, the reasons, margins, and motives of each position are different. There are thousands of ways to enter the stock market. Your understanding of when it’s best to buy, sell, or exit dictates what your chances are. The key types of trades in the stock market are the most common tools. You won’t have to think too much with the help of these trade types.
Entry Orders
Entry orders activate a trade based on the price level you set. Waiting to enter the market at your price point ensures that your conditions are met before you commit to any risk. These orders only activate if prices go your way. The rest of the market factors have no influence over your settings. You will only enter a live trade if prices present better odds.
Trailing Stop Losses
The higher that profiting rallies go, the more you should protect the wins with a trailing stop loss. This feature tells your broker that for every increment of profit you gain, your stop loss must adjust to avoid losing it. This is done by locking in gains as they come.
Adjusted Lots
You can equally win small and large price moves—if your leverage gets adjusted for each entry. Modern brokers give margin, which is borrowed money, to stock, ETF, and currency accounts. Use different value sizes, depending on how long you hold a position.
Shorting
The strategy behind shorting takes advantage of market falls. This method is lucrative for a number of investors. Start with finding peaks in the market. Through various signals and stock lists, short traders watch for strong enough news to sell a stock position on.
Profit Targets
The common patterns of technical analysis give traders a trajectory on their profit targets. Many investors fail to set where they’ll leave a position specifically. Trading without an exit strategy can mislead you to hold positions longer than necessary. Other trades will fail due to letting go too fast. Setting a profit target from the start gives you a market advantage.
Closing with a Buy and Hold
Every investment relies on time to increase the value of an initial principal. Time is always a factor behind the decisions you make. Entering a position should be done with an idea of how long you’ll hold it. Consider both stocks that you sell fast and those that you sell after a long time.
Originally posted on JeffBishop.info.
Jeff Bishop | Professional Overview 