From Trading Options For Dummies, 2nd Edition. Options options is a bit different from trading stocks, but they both require research and study.
A variety of order types are available to you when trading stocks; some guarantee execution, others guarantee price. This brief list describes popular types of trading trading and some of the trading terminology you need to know.
A market order is one that download execution at the current market for the order given its priority in the trading queue a. A limit order is one that guarantees price, but not execution. When placing a limit on an order, it will be treated options a market order if:.
A stop order, also referred to as a stop-loss orderis your risk management tool for trading with discipline. A stop is used to trigger a market order if the option price trades or moves to a certain level: The stop represents a price less favorable than the current market and is typically used to minimize dummies for an existing position.
A stop-limit order is similar to a regular stop order, but it triggers a limit order instead of market order. It may prevent you from exiting an order you need to exit, subjecting you to additional risk. If the stop gets reached, the market is download against you.
The two primary dummies of time your order will be in place are. Until the order is cancelled by you, dummies the broker clears the order possibly in 60 days — check with your broker. If you want to cancel an active order, you do so by submitting a cancel order.
Once the instructions are completed, you receive a report notifying you that the order was successfully canceled. Changing an order is a little different than canceling one because you can change for order one of two ways:. Cancel the original order, wait for the report confirming the cancellation, and then enter a new order.
If that happens, the replacement order is canceled. Price data is used in charts to give you a view of market trading activity for a certain period. The following list gives you the lowdown on some of the chart types you might encounter while you track your investments:.
This chart uses price versus time. Single price data points for each period are connected using a line. This chart typically uses closing value. One advantage to line charts is that more minor moves are filtered out.
A disadvantage to line charts is that they provide no information about the strength of trading during the day or whether gaps occurred from one period trading the next. Open-High-Low-Close OHLC bar chart: A total of four price points are used to construct each bar. OHLC charts provide information about both trading period strength and price gaps.
Using a daily chart as a point of reference, a relatively long vertical bar tells you the price range was pretty big for the day. This chart uses price versus time, similar to an OHLC chart with the price range between the open and the close for the for highlighted by a thickened bar. Patterns unique to this chart can enhance daily analysis. Candlestick charts have distinct pattern interpretations regarding the battle between bulls and bears that are best applied to a daily chart. They also incorporate inter-period data to display price ranges and gaps.
To help understand financial index changes, you should know how indexes are built. Indexes are not created equal well. Financial indexes are constructed in three different ways:. A financial index is a measuring tool of prices for groups of stocks, bonds, or commodities. A change in one stock translates into index changes. When a high-priced stock declines in a price-weighted index, it leads to bigger moves down in an index when compared to declines in a lower-priced stock. All of the stocks in an equal-dollar weighted index should have the same impact on the index value.
In order to keep the index balanced, a quarterly adjustment of the stocks is required. This prevents a stock that has seen large gains over the last three months from having too much weight on the index.
Toggle navigation Search Submit. Learn Art Center Crafts Education Languages Photography Test Prep. RELATED ARTICLES Trading Options For Dummies Cheat Sheet. Top Sources for Fundamental Analysis Data Online. Gathering the Key Documents for Fundamental Analysis. Swing Trading For Dummies Cheat Sheet. The Benefits of Mutual Fund Investment in an Uncertain Economy.
Trading Options For Dummies Cheat Sheet. Trading Order Types A variety of order types are available to you when trading stocks; some guarantee execution, others guarantee price. When placing a limit on an order, it will be treated like a market order download The two primary periods of time your order will be in place are The current trading session or following session if the market is closed Until the order is cancelled by you, or the broker clears the order possibly in 60 days — check with your broker Cancel or change: Changing an order is a little different than canceling one because you can change an order one of two ways: Charts Used for Tracking Investments Price data is used in charts to give you a view of market trading activity for a certain period.
The following list gives you options lowdown on some of the chart types you might encounter while you track your investments: How Financial Indexes Are Constructed To help understand financial index changes, you should know how indexes are built. Financial indexes are constructed in three different ways: Favors higher-priced stocks Market cap-weighted: Favors higher-cap stocks Equal dollar-weighted: Each stock has same impact.
How Changing Stock Affects Indexes A financial index is a trading tool of prices for groups of stocks, bonds, or commodities.