What is a Stop Order?

This type of order is what we use at HowDoITradeStocks.com regularly to initially buy a stock.  The “stop” refers to the price you want the stock to reach before you will consider buying it.  At HowDoITradeStocks.com, we buy stocks using strength as a signal to buy.  This means that we wait until the market confirms for us that the stock is going up before we buy it.

A STOP Order is an order to buy that is entered at a price above the current price of the stock. It is triggered when the market price touches or goes through the stop price we have set.  e.g. If the stock is at $45, we may set our stop order (Buy price) to $45.50.  So we will get our order filled at around $45.50.

When we say “at around”, it means it may not get filled at exactly $45.50 because as soon as the price of the stock reaches the Stop order price (Buy price) it immediately turns into a market order and therefore gets filled at the best price available at the time.  So we may enter the trade +/- at few cents either side of the $45.50.

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