In order to carry out online stock trading, you need to make sure that you choose a good broker, preferably one that has got good tools to help you with your technical analysis so that you are not just relying on his stock tips alone. You will have heard many terminologies used and the jargon can be very confusing. With a little bit or research, you can have yourself fully understanding all of these concepts. There are many types of trades that you can tell your broker to place for you. Each one will be suited for different scenarios. You need to learn when to use them and understand what they mean.
If you want to buy a number of shares in company X at any given price, you will place what is called a market order. Your broker will execute your buy or sell order immediately and pick up the shares for you at whatever is the current market price. In some cases, you may only be prepared to pay a particular price for a stock and nothing more, or you may only be willing to sell it a specific price and nothing less. If this is the case, you would place a limit order. However, the order may never get executed if the price moves away from what you want.
An All or None (AON) order is what you would use if you were interested in a stock, only if you can get a specific number of shares. In other words, if you want a block of 100 shares in “X” company and you issue an AON, your broker will only buy if he can get that exact amount. If he cannot, he will not buy any shares at all. The order can remain until such time that the entire block can be moved. It is useful when you are looking to sell or buy shares at one price in one go, or if you are selling covered calls. A Fill or Kill order must be filled completely on first attempt or cancelled completely.
A stop order works by automatically selling or buying a stock when it passes or falls below a specific stated price. As soon as the stop price is reached, a market order is given and the stock will be sold or bought at whatever the current going market price is. If the market is moving fast, it is possible that the exact stop price may be passed. Online stock trading can be made a lot simpler if you take the time to teach yourself about the different orders and how they work with online stock trading.