Trading Online: Making a Trade

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After opening an online account and putting enough funds in it, you can begin trading online by going long or short on assets that you are interested in investing in.

But in order to begin trading, you will have to get information on the present price values of assets.

There are online brokers that provide information on these. There are business websites that offer information on prices of assets but on a slightly delayed basis. These are usually delayed by about twenty minutes behind real time information offered. These are not good basis because there might be a significant difference in value between present time and delayed information especially if the price movement of the asset is very fast.

Placing an order when trading online

After you have received the information regarding the current price value of assets you are interested to invest in, you now can place an order from which there are two options to choose from – limit or market.

A market type of order is when a buy or sell is done when the price is at its current position while a limit type of order happens when a buy or sell is executed at a higher price than the one pre-determined. However, the trade will not be executed if the price fails to reach the price limit you pre-determined. This in a nut shell is how trading online is done.

Controlling huge losses

There are some trading online options that online brokers offer that are all meant to stop or at the very least, control massive losses from happening to an investor.

The first option is the trailing stop type order.

This is an option in which a trailing stop is done once the price of an asset you have invested in falls lower than the price point you have determined.

The selling price of this type of order is movable. You will have to set your predetermined price point or a certain percentage point. A trade will be executed if the price of the asset reaches the price point you determined.

However, if the price goes higher, your selling price point will also move in the same direction. If an asset opens trading at 15 pounds and you pre-determined your trailing stop order with a five point difference, this simply means your initial pre-determined price for selling is at 10 pounds.

However if the price of the asset goes up to 19 pounds, your new selling price goes up to 14 pounds.

The second option is stop order.

Under this order, a trade is done after the price of an asset goes lower than your pre-determined price point. However, the price basis of this order is the current market price.

The third and last trading online option is called the stop limit type of order.

This order is quite similar to a stop order with the only difference being that the trade is executed at the price you have pre-determined and not at the current price. The reality of it is that when a price moves so fast, there is a chance that you might fail to keep up with the fast movement and fail to execute this at your pre-determined price point.

This only means that there is a chance that the price of the asset you are trading may fall even lower.

6 COMMENTS

  1. Sorry, I’m a bit confused. Am I correct to interpret that this article is about Currency Trading (FX Trading). The article just mentioned ‘trading’ in general terms. Or perhaps my knowledge is rather limited and the terms mentioned such as ‘trail stop’ , ‘stop order’, and ‘stop limit type order are applicable to ANY trading platform.
    Reading through the article, I could make out that these terms refer to Currency Trading. At least, they’re terms I came across when I opened a demo account for FX trading. I currently have a stockmarket online trading platform, but I haven’t met these terms when trading stocks.
    In any case, if I’m wrong – please my apologies. Pardon my own ignorance. But if I’m correct, just a very gentle reminder to clarify matters first hand to avoid confusion.
    tabby recently posted…Philippine Stock market Performance a Day after the May 9 Presidential ElectionsMy Profile

    • To start with I just want to say that this is a good article with some great information for someone who is new to the markets.

      Now in response to your question tabby, yes these types of orders are used in a lot of markets including forex trading and stock trading!
      MoreDividends recently posted…Should I participate in an ESPP?My Profile

      • Thank you for the clarification. I actually went back to my stock trading online platform, but I still don’t see these terms. I guess the stock trading platform I’m using might just be different from what you guys are using. As to the FOREX trading platform that I used for demo purposes, I have indeed met these terms. That is why, I thought the terms discussed here are more applicable to FOREX trading and not to stock trading. In any case, I stand corrected. 🙂
        tabby recently posted…Philippine Stock market Performance a Day after the May 9 Presidential ElectionsMy Profile

  2. Great article, and very informative. When it comes to online trading, I think it’s very important to protect yourself from big losses and this information will help those who are just getting in on the trading game to avoid that happening to them.

  3. I have always wondered about online trading myself, and I have really been teetering back and forth on the idea of including it in my strategy, but have not done so yet. It is intriguing, but I am pretty worried that I am getting ahead of myself and that I should stick with what I know. Interesting tips and ideas, though, nonetheless.

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