Success Trading: Yet More Basic Terminology for New Traders

Written by Chuck Cox

In this day and age of online brokers for virtually every market out there, there are some very useful tools that will help protect your account and lock in profits when you have them. It is our recommendation that you use a good online broker and take advantage of not onlyrepparttar low commissions they offer, but alsorepparttar 148599 automated tools that are available. These tools are virtually idiot proof if you use them. The number one reason that people’s accounts go belly up inrepparttar 148600 markets is because they lackrepparttar 148601 discipline to stick with their trading plans and let emotions drive their trading decisions. This approach is a guaranteed way to lose inrepparttar 148602 markets. Oh, you might get lucky on occasion, but eventuallyrepparttar 148603 market will take your money. Let discuss some ofrepparttar 148604 trading tools we’re talking about.

Stop Loss – Also called a “stop”, this isrepparttar 148605 price at which your position will be automatically closed. If you buy IBM at $50 per share, and then enter $45 as your stop level, then your position will be sold whenrepparttar 148606 price hits $45. So this enables you to protect your account from a large loss. Bear in mind, however, that this stop level only “triggers”repparttar 148607 closing ofrepparttar 148608 position and doesn’t guarantee you’ll get out at that price. A quick price drop might mean your order was executed at $42 instead of $45 because of market volatility – but this would be an extreme case. Also, if you carryrepparttar 148609 position overnight and IBM opened at $40, then that’srepparttar 148610 price it would be sold. Keep in mind that if you had “shorted” IBM at $50, then your stop would be placed above $50 to protect your account. Whenrepparttar 148611 stop is triggered on a short position, you would be buying to coverrepparttar 148612 position.

Success Trading: Some Basic Terminology for New Traders

Written by Chuck Cox

The world of trading can get very complex becauserepparttar financial markets are complex. There thousands and thousands of successful traders out there today. The amazing thing is that they all have carved their own niches and approachrepparttar 148598 markets in a unique way. This should be wonderful news for beginning traders because it demonstrates that there are thousands and thousands of different ways to proper inrepparttar 148599 markets. It’s just a matter of discipline and findingrepparttar 148600 approach that suits your style and personality. With all that being said, new traders must begin somewhere, so let examine some basic terms and approaches torepparttar 148601 markets.

Going Long – This means that you’re betting onrepparttar 148602 instrument (stock, future, option, etc) to go up and that you want to buy. You purchaserepparttar 148603 financial instrument, watch it rise and then sell it for a profit. Profit are realized when you buy low and sell high. It’s also known as taking a long position.

Going Short – This means that you’re betting onrepparttar 148604 instrument to go down and that you want to sell

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