There are many online broker firms today that allow their users to personally conduct their own trading ventures for a small fee. This appeals to many individuals because it gives them a sense of control over their own portfolios. However, the process for placing a trade through an online brokerage is not as simple as clicking a button or an icon.
With the company Scottrade there are three different steps to perform for a basic stock or ETF trade. First there is the market trade, where the security is traded at the current price in the market. To accomplish this type of transaction the user clicks on the trade button found on the ‘Quick Quotes’ page. Next, select whether the action is to buy or sell and the total number of shares for the transaction. Follow this with the stock symbol of the company or the ETF symbol. Now the trader should click on the ‘Type Order’ button and select ‘Market.’ After the type of order has been selected, duration for the 'time in force' needs to be chosen. Market orders are only valid for the trading day that they are placed; therefore the time in force needs to reflect this stipulation. At this point, the trader will be asked to review the order. If everything is how it should be, then the user should place the trade.
Limit orders begin in the same way as market orders. The steps differ when the ‘Type Order’ is reached. At this step a trader would select limit. After this selection, the individual will be immediately prompted to enter the limit price. This is the set value that the targeted stock needs to attain before the trade comes into affect. It is important to note that when buying with limit orders the transaction will occur once the set value or lower has been reached and for a long enough duration to allow the transaction to take place. Selling with limit orders have similar constraints but only occur when the stock has reached the set value or higher. With limit orders the time duration can be selected for ‘Good ‘till Cancelled’ or GTC. This will give the stock a maximum of 45 calendar days to reach the set value before the trade is automatically expired.
Stop orders are slightly more complicated than Market and Limit orders. For selling with a stop order, the individual will sell the stock below current market value, and for buying with a stop order the purchase price will be above the current market value. These orders can be good for up to 95 calendar days. To set one up a trade, begin with the same steps of a market trade. Select stop order in the ‘Type Order’ and enter the price when you went to end your position. At this point it is the same as all the other trades to complete. Stop orders are helpful for the higher volatility stocks in-case they plummet. It also helps the trader to buy into a stock that he or she believes will increase without missing the window of when the stock is still affordable. Once the set price has been reached a stop order will automatically turn into a market order.
Placing trades online is not an overly complicated process, and many of the broker firms offer their account holders access to helpful research tools. With the proper research, trading can become a great way to strengthen anyone’s portfolio.