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The Exodus Project Group

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Elijah Rogers
Elijah Rogers

Itus Stock Buy Or Sell

A market order is an order to buy or sell a stock at the market's current best available price. A market order typically ensures an execution, but it doesn't guarantee a specified price. Market orders are optimal when the primary goal is to execute the trade immediately. A market order is generally appropriate when you think a stock is priced right, when you are sure you want a fill on your order, or when you want an immediate execution.

itus stock buy or sell

A few caveats: A stock's quote typically includes the highest bid potential buyers are willing to pay to acquire the stock, lowest offer potential sellers are willing to accept to sell the stock, and the last price at which the stock traded. However, the last trade price may not necessarily be current, particularly in the case of less-liquid stocks, whose last trade may have occurred minutes or hours ago. This might also be the case in fast-moving markets, when stock prices can change significantly in a short period of time. Therefore, when placing a market order, the current bid and offer prices are generally of greater importance than the last trade price.

Generally, market orders should be placed when the market is already open. A market order placed when markets are closed would be executed at the next market open, which could be significantly higher or lower from its prior close. Between market sessions, numerous factors can impact a stock's price, such as the release of earnings, company news or economic data, or unexpected events that affect an entire industry, sector, or the market as a whole.

Note, even if the stock reached the specified limit price, your order may not be filled, because there may be orders ahead of yours. In that case, there may not be enough (or additional) sellers willing to sell at that limit price, so your order wouldn't be filled. (Limit orders are generally executed on a first come, first served basis.) That said, it's also possible your order could fill at an even better price. For example, a buy order could execute below your limit price, and a sell order could execute for more than your limit price.

A stop order is an order to buy or sell a stock at the market price once the stock has traded at or through a specified price (the "stop price"). If the stock reaches the stop price, the order becomes a market order and is filled at the next available market price. If the stock fails to reach the stop price, the order isn't executed.

When you want to buy a stock should it break above a certain level, because you think that could signal the start of a continued riseA sell stop order is sometimes referred to as a "stop-loss" order because it can be used to help protect an unrealized gain or seek to minimize a loss. A sell stop order is entered at a stop price below the current market price. If the stock drops to the stop price (or trades below it), the stop order to sell is triggered and becomes a market order to be executed at the market's current price. This sell stop order is not guaranteed to execute near your stop price.

While the two graphs may look similar, note that the position of the red and green arrows is reversed: the stop order to sell would trigger when the stock price hit $133 (or below), and would be executed as a market order at the current price. So, if the stock were to fall further after hitting the stop price, it's possible that the order could be executed at a price that's lower than the stop price. Conversely, for the stop order to buy, if the stock price of $142 is reached, the buy stop order could be executed at a higher price.

A price gap occurs when a stock's price makes a sharp move up or down with no trading occurring in between. It can be due to factors like earnings announcements, a change in an analyst's outlook or a news release. Gaps frequently occur at the open of major exchanges, when news or events outside of trading hours have created an imbalance in supply and demand.

The next chart shows a stock that "gapped down" from $29 to $25.20 between its previous close and its next opening. A stop order to sell at a stop price of $29--which would trigger at the market's open because the stock's price fell below the stop price and, as a market order, execute at $25.20--could be significantly lower than intended, and worse for the seller.

In a similar way that a "gap down" can work against you with a stop order to sell, a "gap up" can work in your favor in the case of a limit order to sell, as illustrated in the chart below. In this example, a limit order to sell is placed at a limit price of $50. The stock's prior closing price was $47. If the stock opened at $63.00 due to positive news released after the prior market's close, the trade would be executed at the market's open at that price--higher than anticipated, and better for the seller.

Traders just starting out are often excited about getting into the market. But before doing so, it's important to understand factors that can influence decisions on when to buy, sell, and hold on to stocks for max growth and to limit losses.

There's no way to know exactly what a stock or asset will do for sure because its price can be impacted by many factors, ranging from broader market conditions to its own business performance. While there's not one specific strategy that's best for everyone, professional traders do have several "rules" they follow when considering their investment moves, such as establishing entry and exit points and assessing fundamental factors.

An entry point is the price level where a trader buys or "enters" a position, while an exit point is the price a trader sells or "exits" the position. Ideally, you want to determine your entry and exit points in advance to provide a clear strategy toward minimizing risk and maximizing returns. Establishing entry and exit points will also help you avoid making decisions based on emotion.

Many traders try to establish an entry point to try to maximize gains. While some are very long-term buy-and-hold investors, others think it's also important to determine when to cut losses if a stock's value is declining.

Some traders may find it feels natural to hold on to underperforming assets and wait for their value to rebound, but this can be a mistake if the asset continues to decline. While some professional traders do adhere to a buy-and-hold strategy, many set a clear plan for buying and selling.

Traders commonly use stop and limit orders to help maximize gains and minimize losses. Instead of constantly monitoring the price movements of your investments, you can establish stop or limit orders so you can enter or exit according to your plan. A limit or stop order dictates how much stock to buy at a certain price or once it reaches a certain price. So, you can set a limit or stop order for higher or lower than the current market value to try to time your trades in a way that minimizes your losses or maximizes your gains. Market value is the current price of the stock.

With limit orders, a trader's goal is to buy or sell a security at a particular price. For example, if a stock's market value was $65, a trader who wants to buy it may set a buy limit order at $60 if that's considered their ideal entry point. Similarly, if a trader wants to sell that stock, they may set a sell limit order of $70 if that was their planned exit point.

Stop orders are generally used more as a defensive strategy to minimize losses. To avoid missing out on a potential opportunity if the stock continues rising in value, a trader may set a stop order at a point well below the current price. But if that stock is expected to trade lower, the trader may want to try to minimize losses with a tighter stop order that might be close to or just below the current price.

Stop and limit orders are designed to trigger when the trader's pre-designated price is reached. So, in the case of the trader setting a $70 sell limit order, the stock would sell automatically when the stock reaches $70. Or, if there's a stop order under the current price, the stock would automatically be sold once it hits that price.

In the sell example, the limit order helped the trader know when to sell as the price increased, while the stop order helped the trader determine when to sell as the price decreased. That is the key difference between a limit and a stop. Certainly, if a stock is at $50 and one trader places an order to sell "if" it increases to $60 and another trader places an order to sell "if" it falls to $40, those traders have two very different mindsets. But that's not the only difference.

It's also important to understand the risks associated with both order types. For one thing, a limit order guarantees the limit price or better. But on the downside, it might never get filled. Stop orders are usually intended to exit a stock position if the price tumbles. Should that happen and the stock price hits that stop, it then becomes a market order and competes with everyone else's order to get filled.

There's no guarantee your order will fill at the exact price you've set. If you set a stop order to sell at a certain level, you might actually end up selling the stock slightly or in some cases dramatically below that level.

Another risk of stop orders is their automatic "bail out" feature, which can be good news or bad news. If a trader sets a sell stop at $60 and the price falls to $35, then stopping out, even if the $60 "triggered" stop fills at a lower price, looks like a good thing. But things could turn out differently. For instance, if you bought a stock at $65 and set a stop at $60, the stock might go down to $59 and be sold, and then jump back to $70.

As you consider when to buy, sell, and hold stocks, you most likely want to learn about the financial strength of a company, something many fundamental analysts do. One way to do that is through the company's financial statements, which the Securities and Exchange Commission (SEC) require publicly held companies to file quarterly. Financial information can be found on the SEC's website and usually on the Investor Relations page of the company's website. 041b061a72


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