Success Trading for New Traders: What Does Bid and Ask Mean?

Written by Chuck Cox


Continued from page 1
bid price andrepparttar ask price is calledrepparttar 148594 “spread”. If you look atrepparttar 148595 spread of a large cap stock that trades over a million shares a day, and compare that to a small cap stock that only trades a thousand shares a day, you’ll see a huge difference. Stocks that are more liquid (or more activity) will have much smaller spreads than those with less activity. Thus, you will get a better fill (or deal) for a market order on a more liquid stock. One tool you can use to possibly improve your price is to use limit orders. If you want to buy XYZ at no more than $12 andrepparttar 148596 bid is $11.50 andrepparttar 148597 ask is $12.50, you can place a purchase order with a limit of $12. This means thatrepparttar 148598 order won’t be filled unless you can get it for $12 or better.

One word of caution with limit orders is thatrepparttar 148599 market could run away without you if used with a buy order. And if your order is filled, you’ll be buyingrepparttar 148600 stock on a downtick, which means it could be making a major move down. As a general rule, it’s not a good idea to use limit orders when selling stocks asrepparttar 148601 market could make a big move against you without ever hitting your limit price and you’d be stuck with a big loss.



Chuck Cox is a Technical Writer and Industrial Scientist by professional with a background in statistics. He has used mathematical and statistical methods to invest and trade in the stock, futures, and options markets. Chuck has owned various businesses and presently operates several websites. To learn more about trading the markets, visit his website, http://www.earncashathometoday.com/trading-stocks.htm


Successful Trading – Taking Profits - Part 1

Written by Chuck Cox


Continued from page 1

With that said, let’s discuss some profit taking options that you might consider.

When you’ve bought your stock, option or commodity and then placed your stop, you must first try to prevent that position from losing money. We recommend that you move your stop right along withrepparttar price movement. In other words, if your stop is placed one point below your purchase price and your stock moves up one point, then we recommend you move your stop up to your purchase price. After doing this, you now have a scratch trade atrepparttar 148593 very least andrepparttar 148594 position poses virtually no risk to your account – only “gap downs” at market opens can hurt you. And of course,repparttar 148595 golden rule with using stops is that they can only be moved up and must NEVER be moved down.



Chuck Cox is a Technical Writer and Industrial Scientist by professional with a background in statistics. He has used mathematical and statistical methods to invest and trade in the stock, futures, and options markets. Chuck has owned various businesses and presently operates several websites. To learn more about trading the markets, visit his website, http://www.earncashathometoday.com/trading-stocks.htm


    <Back to Page 1
 
ImproveHomeLife.com © 2005
Terms of Use