Should you buy or sell with a limit order or a market order, and how should you set stops effectively to protect your trading account limit market trailing oco, ocd you're, probably wondering what the heck are. All these trading orders on your broker platform, and how do you actually use them for your trading strategies getting to know all of these order? Types are actually really important, especially if we're day trading short term market volatility, whether they are the low flow penny stocks or the large cap breakouts, and that's why today we're gon na take a look at these major order, types that you should all be able to Find on your broker platform, both on desktop and mobile. These order types will not only get you the best entries and exit on take profit possible. They'll also help you limit your losses, as well, so by the end of the video you'll know how to use them to your advantage and to fit your trading strategies before we dive into today's topic.

Make sure you drop a like at the bottom of the video and subscribe to the channel if you haven't already what else, i'm gon na be coming after you with my bad jokes now to the fun part to get a hang of trading orders. Let's understand the most elementary of trade orders, which is the first one market order, because market order types can be executed instantly, whether it's a buy or sell and regardless of what the current prices are yeah. It's that quick market orders are best suited for trading high volume securities like futures or large cap stocks, typically during market hours, and it's not good for low volume trading during pre-market or after hours, and this order type is very easy to use. There's little or no hassle when it comes to using this, all you need to do is just press the button to execute the order to buy or sell.

This is a very common order, type on robinhood and think of swim and many other free commission brokers. The biggest pro of market orders is, of course, the speed of execution like we mentioned before, but there's a huge downside to using market orders. For example, when you're trading low float stocks, the market orders may get filled at unexpected prices. You may get filled at too high of an entry when you are buying breakouts or sell too low when you're trying to take profit.

So this could potentially cost you a lot of trading profits and sometimes even leading to bigger losses as well. So, let's put things into perspective here, for example, let's assume the bid and ask prices for zoom video zm are 143 26 and 194 36 respectively, with 100 shares available on the ask, let's say: you're a baller and don't really care what prices you fail at and You decide to buy with a market order, 500 shares of zoom since you're using market order. Your buy will get filled on the ask, which is the best available price someone's willing to sell and you'll get filled instantly since the seller on the top ask column, only has 100 shares to sell you'll get filled. The first 100 shares at 494 and 36 cents, and the next 400 out of your 500 shares by order will fail at the next available price on the ask.

So in this case, your next 400 shares will fill some at 494.50, 494.94 and so on and so forth. So you can see that market orders are not really suitable for thinly traded stocks like zoom, but market orders are really best for people who are buying long-term investments or long-term swim positions. These are usually people using free commission brokers or the big banks online broker platform, but market orders are not really suitable for active day trading entries and exits unless it's stopping out which we'll talk about later on. If you use market orders to buy and sell in day trading you're, essentially at the mercy of market makers, who will of course try to rip you off as much as possible and give you the worst fills? Sometimes it could be 10 cents or 20 cents off.

If the spreads between the bit and ask are quite wide, here's some friendly trading tip for you always take a very close look at the bid and ask spread and the volume of a stock before you place a market order. If you have questions about what bid and ask are or the level 2, i have a video for you to check out later on. Now. If you have issues with the lack of control that comes with trading with market orders, then you should definitely use limit orders, which is the second most important order, type to know in day trading, and it is indeed the most commonly used order types.

Almost all the order types i used to trade are limit orders for buying selling shorting and covering so why are limit orders different from market orders because it literally limits the exact price you can buy or sell this way the traders are sure to get their desired And the best prices for the stock positions - let's say you choose to buy a low float runner like u1. In this example, you'll see the stock is too high right now after hours at seven dollars and eighty cents, but you want to buy at seven dollars. Whole dollar mark on the pullback. Instead to do that, you can place a buy limit order at seven dollars this way.

If this stock does pull back, you'll get filled at seven dollars, exact price or cheaper, like 699 or 698, which is in your favor as a buyer right. This is like, if you were bidding to buy a lamborghini on ebay for half a million dollars, but you ended up getting it for only 499 000, what a steal and it's the same way when you're selling your stock with a limit order. So if you want to sell and take profit here at eight dollars, your order won't get filled until the stock hits that exact eight dollars mark or higher. So you can see now why it's more advantageous for day traders to use limit orders with entries and taking profits, and that's not all limit.

Orders comes in really handy when the market is very volatile and the stocks are rising or falling at heart. Wrenching rates and you want to avoid getting bad feels or getting screwed over by market makers like we said earlier, they'll most definitely try to fill your buy order at the very top and yourselves at the very bottom, especially when you're trading, these volatile low-flow small cap Runners also limit orders are great for part-time traders or swing traders and long-term investors who just want to buy when a stock actually gets to the desired support levels on the daily chart, and all you do is to set the limit, buy order for good till cancel And wait for the stock to hit your price, while all of these benefits of limit orders are great, you also need to know that sometimes they can be quite frustrating too, and you know why it's because they may never get filled. Sadly, you can only control so much in the stock market and some of these things you can't control, are when and if a limit order gets filled if the stock price actually never drop to the exact scent, the order might just sit there forever and forgotten without Getting filled until you cancel it, and this could lead to missed opportunities and actually potential losses as well. If the stock we mentioned earlier, you won never pulled back to exactly seven dollars to the cent your buy order would never have gotten executed, not if it touches to 7.03 or 7.01.

No, it has to be exact to the cent and your limit order might only be partially filled too. Maybe only 100 shares get hit at seven dollars and the rest of the 900 shares buy limit order stays pending if the stock bounced off seven dollars too fast. The worst case in this situation would be if you are trying to stop out of your positions with limit order. If the stock positions you're trading are like the low float runners, we talked about or if it has high spread, then you may never get filled on the stopout if the stock crashes, through the prices way too quickly, and that's why, when using stops, i always recommend Using stop market order instead of stop limit order, which brings us to the third order, type stop order, like the name suggests, it's meant to stop your position, whether you're, long or short.

This way you get to limit your losses according to your risk and protect your trading accounts at the same time, with a stop market order. Once the stock crosses your predetermined price, the stop order converts into a market order, which is then executed at the best available price that we talked about earlier. This stop market order will make sure you get stopped out all of your shares. For example, let's say you're long, a thousand shares of spi at 25 dollars.

You want to stop out if the stock breaks below 22 dollars. Since it's a very low float and volatile stock, the stock market order could fill some of your shares around. You know 22 dollars, maybe only 200 shares and the rest of the 800 shares at perhaps 2180 or 21.50, but all of your shares, the whole 1000 shares will be stopped out for sure below 22 and at first glance you might be thinking. Wait a minute.

Humble trader, that means i'll lose a lot more than i had wanted. It sounds like i should have used a stop limit orders at 22 instead, and i understand your concern, but trust me most times, you'll be very thankful that you get out of all of your loan positions instead of having a stop limit order not trigger at all. If the stock moves too fast or if your broker is too slow, can you imagine being stuck holding the bag with the rest of the 800 shares long on spi at 22 dollars and the stock is down to 15 dollars all because you wanted to save 50 Cents - it's not worth it, my friends! So if you do find yourself in a situation where you're unable to monitor your stocks for an extended amount of time, i recommend using stop market orders on your day trading positions for most large cap stocks with a closer spread. You shouldn't have too much slippage problems when you're stopping out the next order.

Type we want to talk about is the bracket order. This is an order that helps traders set a profit target, as well as a stop order automatically when they first enter a new position. Long or short bracket orders are extremely useful for part-time traders, who cannot be glued to the screen and watch the positions all day. If you're looking to enter a long position once the main buy order is executed at your price, your broker platform will then automatically place.

Two more orders for you at your predetermined price: one is a sell order for you to lock in profits and the other one is a stop loss order in case your trade goes against you. So essentially, there's three layers of orders, one at the top and one at the bottom like pieces of bread and the stock position you bought in the middle like a ham and cheese sandwich. This is how i think about bracket orders by the way, because i'm kind of hungry right now and i haven't eaten lunch. So let's say our friend mike bagholder here wants to buy 100 shares of tesla at 399 dollars.

If he uses a bracket order, he can set the top piece of bread which allows him to lock in profit at 406. But he also wants to make sure that he stops out of the position in case tesla tanks. Out of nowhere, which is where the bottom piece of the sandwich bread comes in the stop loss order which he can set to trigger if the price reaches 397 dollars so by using a bracket sandwich order, mike bagholder can be sure he's risking one to potentially make Three or more and he doesn't get stuck holding the bag anymore. Remember that the top and bottom brackets, the sandwich breads, are also called oco order.

Pairs oco stands for, one cancels the other so once mike bagholder takes profit or gets stopped out. The other order pending is cancelled automatically. The only downside to using bracket orders is that they can only be used intraday and they're cancelled automatically after the close. Now, let's move on to our fifth order.

Type trailing stop order. A trailing. Stop is essentially a stop order. On steroids, it's an order type that traders often use to let their winners run longer as long as the trend continues to the upside, if they are long in a stock, trailing stop.

Orders will only stop you out of the position if the stock reverses to a predetermined amount from the highest point. So essentially, this order type moves the stop up for you each time the stock makes a new high, so you can always be risking a predetermined amount. Like 50 cents or a dollar from the highs, this order type will be very useful for trading large cap stocks that tend to trend for the entire day in a directional market such as earnings, breakouts or stocks such as dropping all day, due to short seller reports. Of fraud like nkla for those large cap examples, you can set a trailing stop of 70 cents to a dollar.

So when and if the stock breaks out and pulls back some in a normal condition, you will still stay in the stock. Remember it's normal and healthy! For a stock to pull back some intraday, but if there's a major reversal in the trend or if the entire market rolls over your trillion stock will make sure that you get to keep most of the profits. Whether you're, using this order. Type for long or short positions, you can rest assured that your profits are protected for as long as the price is in your favor.

So these are some of the most common order types we use in trading to summarize for active day trading, entries, buy and sell. It's best to use limit orders for stop. Orders are meant to protect your position if the stock goes against your direction, it's best to use stop market orders. As for part-time traders or those who need to step away, then they can use bracket, orders and trailing orders to take care of their exits and stops and for those people who want to just get in or out of a position asap and don't care about.

Market makers filling them at the very bottom or at the very top, then market orders is your best fit now. After talking about all these order types, if you're curious about some of my broker platform setups, i have some videos for you to check out. If this video helped you out, please remember to drop a like and subscribe. Thank you guys so much for watching as always and the humble trader and i'll see you guys next week, hey guys thanks for watching.

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