What are Stock Broking Stop and Trailing Stop Orders?

By Michael Hanna

A stop order, also known as a stop loss order, is a type of stock order where the trader can set a point to buy or sell a security once the price of that security reaches a trader specified fixed price. The trader fixes the price above the present market value in order to set up a buy stop order and below the current market value for a sell stop order. Stop orders can help to limit an investor's financial exposure within the market.

A sell stop order is essentially an instruction to a broker to get them to sell a security which is being held, at the best price currently available, should the market value drop below the pre-set stop price. These are traditionally used when investors “go long” in the hope of stock prices rising, and help to reduce any potential loss should the stock price fall beyond the fixed sell stop value.

A buy stop order is used typically to limit a potential loss on a short seller speculation, where an investor borrows and then sells a security in the hope of reducing the subsequent market price. Once the price falls, the investor can then buy the stock back at the lower price. This enables the trader to then return the stocks purchased to the lender, in order to profit from the difference between the original selling and repurchase prices. The buy stop order, which is always set above the initial market price, is automatically triggered when the stop price is reached, and is a call for the broker to cease purchasing stock; and so protect the investor against loss, should the price continue to rise.

While a standard stop order uses a fixed price to control when it becomes activated, a trailing stop order utilises a dynamic stop parameter. Investors using trailing stop orders specify a price difference or a percentage difference from a benchmark price position. This benchmark is the highest or lowest market price that the stock has reached since the stop order was placed. Trailing stops are used to protect profits as part of a risk management strategy, and will automatically adjust as the market moves in the investors favour. This type of order allows the trader to profit from any favourable movement within the market whilst at the same time having the protection of a stop order to prevent huge losses being accrued.

These days it is easy to find a large amount of information online about stock trading terms, through sites such as Wikipedia, it is important to note however that you need to ensure the validity of all information used to make any investments, in order to reduce the risk of potential financial loss. Many of the larger banks such as Barclays Stockbrokers offer regulated sources of information on subjects such as stock stop orders along with stock trading services to all potential market investors.

Disclaimer:
All information contained in this article, is for general information purposes in the UK only and should not be construed as advice under the Financial Services Act 1986.
The price and value of investments and their income fluctuates: you may get back less than the amount you invested. Remember that how an investment performed in the past is not necessarily a guide to how it will perform in the future.
You are strongly advised to take appropriate professional and legal advice before entering into any binding contracts.

Submitted by:
Michael Hanna

About Michael
Michael is a keen writer, and internet marketer living in Scotland:


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Trading Stocks Online - What Works

By Lorraine Weston

Imagine you are trying to do car repairs, and the only tool you have is a hammer. Sure, you’ll be able to get some jobs done, but they won’t be done properly and you’ll most likely break something else in the process. Trading stocks online is much like that. There are many ways to trade, but only some of them truly work. Sometimes, investors end up losing money because they didn’t take the time to find the proper investment method or tool. Here are some tips that can help you to trade successfully.

If you want to reduce the risk that comes with holding an investment, you will want to look into the practice known as hedging. One of the best ways to hedge your investments is to take any shares you have in a company and sell them to the company’s opposition.

For stability, you will want to look to investing a pre-arranged amount of money each month into one or more mutual funds. Mutual funds are composed of shares from approximately 10 companies, and often focus on a specific area of the market, such as energy, paper, or currency. Although there is still a risk that you can lose money through your mutual funds, they are much more stable and have a much higher chance of recovery, based on the fact that they center on stocks from more than one company. Be patient if the market takes a downturn; don’t sell your funds or stock immediately. History has shown that if a market goes down, it will also go up.

Another online trading tactic is to look at the stock market and find good, stable companies whose stock has taken a downturn. The way to find them is to look for ones that have dividend yields. Pick several of these companies and invest equal amounts of money in buying stocks from each of them. Although there is risk involved with this method, the history and stability of these companies is often enough to pull them through the slump they may be experiencing. And when their stocks begin to rise in value, you will benefit from this wise trading investment.

Learn about Online Stock Trading and Investment Property at http://www.selfhelppage.com.

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Day Trading Commodities

By Marcus Peterson

Day trading has its own value in the marketing world. While increasing and decreasing values and levels of risk can fluctuate between maximum and minimum, many people indulge in day trading to make some money.

Trading in stocks on a regular, day-to-day basis increases the value and level of success. Sometimes risk factors may affect the success levels. However, it is an optimistic and realistic process with a goal to increase profits.

Many young college students indulge in day trading. Senior citizens practice day trading as an option to supplement their income when they retire. Typically, investments of a significant size are intended for peoples to learn quickly. Trading is learned by osmosis, and ample time and opportunity to monitor the stock market is a necessity. The traders often offer advice to clients when called. There are lots of placement procedures found in day trading. There are few career options available for undergraduates, graduates, and perhaps management students as well. The undergraduates are recruited as analysts on a full time basis.

The analyst programs are standard and last approximately two to three months, especially in New York. The course provides an added advantage to a person who wants to become an analyst. The training program includes bond math and basic accounting. Various managing directors have officials from the company conduct training in specific areas of course studies such as credit derivatives, corporate bonds and listed stock. When the training program ends, the analysts are fully equipped with the knowledge of stock market and stock trading. The pay scales of analyst are usually less than management students. Trading business has its own commodities and specific value for the other world.

Day Trading provides detailed information on Day Trading, Forex Day Trading, Stock Day Trading, Online Day Trading and more. Day Trading is affiliated with Futures Trading Software.

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