Congratulations! You've reached the end of the stock trading tutorial. You now have the basic building blocks to help you make better decisions for your portfolio. This handy summary will serve as a cheat sheet in the future:
- Market orders guarantee execution but not price.
- Limit orders guarantee price but not execution.
- All-or-none orders are only executed if the broker has enough shares, as a block, to fill your order in a single transaction.
- A stop order automatically converts to a market order when a predetermined price (the stop price) is reached. A stop loss order, on the other hand, automatically converts to a limit order when the stop price is reached.
- When you sell short, your potential losses are theoretically unlimited.
- Day orders expire at the end of a trading day. Good-till-canceled orders stay on the books until they are completely filled, canceled, or sixty calendar days have passed.
- Due to the lower level of liquidity, extended hours orders are subject to far greater volatility than those placed during the regular market day.
- Trailing stop orders can be used to lock-in profits while potentially benefiting from the increased rise in stock price.
- Bracketed orders are the same as trailing stop orders, except that they require an upper limit trigger price which, when reached, results in the stock being sold.
