Limit Orders – What Are Them And How To Use Them To Increase Your Profits

Limit Orders What Are Them And How To Use Them To Increase Your Profits

When trading online, you will be faced with several different options and choices that you will have to make to be able to execute your trades properly. One of them entails choosing the type of order that you want to set in your home broker. This article will discuss "Limit Orders", since they are the most common type of orders, and how you should use them.

Limit Orders

This is an extremely useful type of order where you decide, beforehand, the exact maximum price that you will pay for a certain stock on a certain time. Or, the minimum price that you will accept selling a stock that you currently own on a certain time. These types of orders are a good alternative to market orders and will help you to better control yourself when trading the markets. You have to define both the stock quantity that you want to buy and also the set price that you are willing to pay / sell.

When I started using these orders, they increased my performance greatly by enabling me to better control my emotions. If you have been trading in the market for some time now, it has probably happened to you and the time, it looked like that ONLY YOU was experiencing that that just after you bought that stock that you have been watching for more than a week, all of a sudden it starts plummeting for apparently no reasons! Do not worry. This situation, unfortunately, happens more often than not.

You are not alone on that, that I can guarantee you. It has happened to me and to some other traders as well. That is when limit orders will help you. If you know that a stock that you want to buy is prone to make a pullback before moving higher, set a buy limit order where you expect the stock to pullback and then leave it. If you are not filled, then forget it, it was not a good price to start with. You trade would only be valid if you could buy that stock at that price right? So you didn't, so what? Go out and find the next one!

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