Conditional orders
I use conditional orders very often for many different reasons. There are several types of conditional orders that all have their own strengths and weaknesses. And they have different uses depending on the situation. Limit orders, Stop orders, and Market orders are the most common types of conditional orders which I use often. But my favorite is a Trailing Stop order.
A Market order is the best way to get in and out very fast as it will fill the order immediately at the ask. This can be useful if you don't have a stop order in place and the price moving too fast to target an entry price or an exit price.
I use a stop order to save myself from losses or to trigger a buy order when I am not paying attention to the related stock I wanted to buy. I mostly used them for exiting rather than entering into an investment. This can be very useful for swing traders who have to many positions to manage. Here is an example of how it works below.
I use a stop order to save myself from losses or to trigger a buy order when I am not paying attention to the related stock I wanted to buy. I mostly used them for exiting rather than entering into an investment. This can be very useful for swing traders who have to many positions to manage. Here is an example of how it works below.
For instance for the ticker AMZN recently I placed a stop order to buy AMZN when it reached a recent low that it made in the past. Basically I was calling for a double bottom and I was buying at the previous low. When AMZN's price fell to my target price that I had programed into the stop order then a market order was triggered and I bought AMZN shares. This could have been risky because the share price could have continued to drop after my order was triggered but I got lucky as there were many other buyers at this level and they brought the price back up.
Here is what the charts looked like when I placed the Stop order.
Here is what the charts looked like when I placed the Stop order.
Here is how things looked when the order was triggered. This could have backfired if the price dropped more after the stop order was triggered.
My most utilized conditional order is the Trailing Stop order. This one is useful when you don't want to enter or exit too soon on a trade and potentially miss out on gains or you want to minimize your losses. Trailing stops essentially ride the wave with you as their stop price moves with the moving share price. You can program you Trailing Stop to sell if the price drops a certain dollar amount or percentage. Or you can program the order to buy once the price has gained a certain amount. This is very useful in staying in the trade when a stock has somewhat volatile price action and swings up and down often within its overall trend. Here is an example of how this can work below. Lets go off of the example from AMZN earlier.
So when the Stop order was triggered earlier I could have put a Trailing Stop Sell order to minimize my losses if AMZN continued to drop after I purchased it. For example, I cant lose more than 5% of the AMZN investment so I would put my trailing stop order at a 5% ratio. This way when the price goes up on AMZN 3% my stop will rise 3% as well locking in those profits because when AMZN's price falls my stop will remain at that higher level. As you can see below the price did not fall and the trailing stop climbed with the share price further locking in profits. The trailing stop would be triggered several days later with much more profit than a regular Stop order would have as the regular stop order would have been set at a much lower price. The one time a trailing stop loss can backfire on you is when a stocks price action is too volatile and the swings are too wide. When this happens then your trailing stops will be hit with a wide swing down then the price will skyrocket. Similar to the volatile swings in price of $GameStop(GME.US$ and $AMC Entertainment(AMC.US$.
One pro tip to use when placing stop orders and trailing stop orders is to use the ATR Indicator to find the average range fo the the stocks price action to locate a safe stop price. Look up the ATR indicator if you like to use conditional orders. I would explain but that is a whole other conversation.
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not-a-cow : I don't understand why you placed a stop order to buy AMZN when it reached a certain point and then purchased at market rate. Why didn't you just do a limit buy order instead?
SpyderCallOP not-a-cow: that's a better idea for Amzn because it is so liquid all of the time. i should have done that with a stock like amzn. Other less liquid stock would sometimes skip over my fill price because the would move very volatile and skip over my entry point price. This most likely would not have happened with amzn. Good point.
102766980 : As always thank you very much for sharing . Appreciate it .
Kendra Vandy : Limit buys are life
but market buys have really helped in trying to buy in options I have major underlying stock conviction in.
SpyderCallOP Kendra Vandy: i almost always do market buys for options. it get me in and out of a trade very fast while the price is rising or falling very fast