Beginners Guide To Trading

Beginners Guide To Trading

If you want to enter the world of trading, then the first thing you need to choose is a trustworthy broker for you. Do a research on the major brokerage firms available in the market, compare the fees offered by them and finally choose a one which suits your requirement. Even in the case of trading of virtual currencies, it is very important to go through the reviews of the various trading platform before you pick one. Ethereum code is popular software that has been getting only good reviews and you can read all about it here.

After you choose the stockbroker for the trading of stocks, you need to understand about different types of trades that you could place in the market. It is important that you know about it to avoid committing any mistakes.

Types of trades

Market orders- The most common and the simplest type of trading is the market order.  The market order just informs the broker to trade in whatever the price is quoted when the order is executed.  It has a low commission as they are quite easy to execute.

Limit orders-  In the case of limit orders,  it allows the trader to limit either minimum price you wish to accept while selling or the maximum price that you will allow in case of buying. The major difference between the limit order and the market order is that the stockbroker will never guarantee that the limit order will get executed.  There are things you need to know when you place the limit order:

  • The price of the stock may never rise or fall to the limit set by you. Hence, the order might not get executed.
  • Limit orders get executed only in the order that has been received by the broker.
  • If at all there is a sudden drop in price, then the order will get executed at the limit price.

Day orders and Good-till-cancelled orders (GTC) – Whenever the trade is placed, you should always give the trade an expiration date.   The day orders get canceled when the day ends. Mostly all the orders placed by the traders are day orders.  But in the case of GTC orders, the trade remains open till one of the following things occur:

  • The trader cancels the order
  • They get filled completely
  • 60 days gets passed

It is always best that you get prepared well and understand the market before you place an order.


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