Hey guys, it's sasha, a lot of people who are new to investing may not understand some of the jargon. Maybe people even who have invested before, who have done some stuff in the past, may not have used any of these different types of orders that exist because there's a lot of out there, and some of them are not as easy to understand as others. Many people only ever do market orders, which is you just click a button to buy and you'll buy shares at the price at which they are trading right now. But what are all these other options that you'll see in your investing app? What are limit? Orders? Stop orders stop limit orders and they exist for the way, buyers and cells.

What how do they exactly work? I'm going to explain all of that in a lot of detail exactly what all these different are and exactly why you might want to use them and when you might want to use them. Let's start with the most common and frequently used out of these limit orders. These exist both for buying and selling stocks, and they basically allow you to go and buy or sell something only once a certain price is reached. So, for example, if a share is priced at 650, let's say i definitely want to buy more of that share.

If it drops to a price more like 600, what i can do is i can go and place a limit buy order to make that happen. So then, if the price falls from 650 down to 600, then my limit buy order will be triggered and i'll be able to buy those shares. If the price never falls to 600, then the trade will not execute, and just so you know just so you clear. The price doesn't execute at the exact price that you've set.

If the price drops a little bit below 600 and by the time your order actually comes through and executes, it might buy at a slightly lower price. The same works in exactly the same way in reverse, which is a limit sell. So if you, for example, own these same shares, they cost 650. You might want to cash in when they reach some number that you're happy with, for example, 800.

So you might place a limit sell order so that if the price ever does reach that 800 mark, then your shares will automatically sell at that point as a market order for roughly speaking hundred dollars, maybe slightly above maybe many trading platforms will let you set expiry Dates for these, so sometimes you can set the end of the day, which is the most frequent one, but sometimes you can keep them open for as long as you like. So what that means is, if you do set an expiry date. It means that after that point, that order will essentially be deleted. It means that maybe, if you want to make sure that during the day, if the price fluctuates above or below certain things, then certain trades take place.

You can make that happen, but if you don't want it to carry over to the next day, you can make sure that they automatically all get go away by the time the next trading day starts. Next, let's talk about stop orders they're the next most common type of special order, and these might seem complicated, but they're actually exact opposite of limit orders, if you think about them. So a stop, sell order is triggered when the price is going down, and you decide that you want to sell out of position if it falls below a certain point. This is often called a stop losses because it prevents you from incurring greater losses than the point at which you know you're you're happy with selling.

So what that means is, if you say, have these same shares that are at 650 and you say want to make sure that you don't have those shares if they continue falling or if the market enters some kind of free fall and you set a stop losses. Order at 600 that means that if the price reaches that point, you will sell your shares at that point and then whatever happens to the price afterwards, you don't really care you can choose to buy in at a later point or do whatever the exact opposite of That is a stop buy order, and these are usually far less common and far less popular by regular investors essentially allow you to buy at a certain price if the shares go above that price - and this is more frequently done by investors - who want to make sure That, if the bet that they're taking on the share price, for example, going down, doesn't play out and the shares begin bouncing back, then they are able to go and buy back into those shares before the shares go even further. So it's sort of protection, but essentially it's just just the same as the share price rises so from let's say: you're 650: you might sell a stop, buy order for 700. That means, if the share price reaches 700, then you will then be buying shares.

As per your instruction at that price point, the moment it is triggered, so let's recap on these to make it nice and simple, because i know this can still be quite confusing if the price of a share is going down. You have two types of orders that can be triggered. A stop loss order will automatically sell shares the moment. The price reaches a particular point so that you can prevent yourself from losing even more value.

After that point, a limit buy order will buy shares. At that point, to make sure that you get the really good value shares at a low price point that you've previously set. If the opposite happens and the share price is going up, then a stop by order will buy shares at a price that you've previously set. Let's say at the 700 mark: whereas a limit, sell order will sell shares at that very point, because you're happy to take the profits at whatever the price is next, let's get a little bit more complicated and talk about stop limit orders.

Now, the easiest way to explain to them is that they work exactly the same way as stop orders, except the order will only execute if a specific price that you set is actually available. So you can go and set two separate prices, one at which the stop order is triggered and the second of which will actually execute and the reason it's important because it might seem. Why would you do that? Why not just do a regular stop order, but the reason important is: let's say you have these shares at 650 and you want to sell the shares if they fall below 600. But let's say during the day the price only falls to 610 and then overnight something happens.

Some news comes out, elon musk does a tweet or something and the share price collapses all the way down to 500.. If you had a real normal stop order, what would happen is at that point. Your shares would sell the next morning at 500 and you're gon na be losing a ton of money on those shares. However, if, during the course of the day those shares and go back up, you might be quite disappointed.

You might not want for that to be the case. So if you have a regular stop losses order, your share will immediately sell. But if you have a stop limit order, then instead you can set the price at which you're happy to sell once the trigger is passed. So in this case you could set it to, for example, only be 550.

So if the price collapses from 610 n500 and then climbs back up to 550, then your order will execute and then you'll sell the shares. But obviously, if the price never does climb back up or never hits that 550 mark, then you may risk never selling the shares at all, and so this is a very specific, very unique kind of case, which probably most investors will not want to touch, because you Need to really understand what you're doing, and typically this probably applies far more to more experienced traders who are using this for specific purposes. Last, let me explain something that is even more complicated than that, because i know some people will be asking. What is a trailing? Stop order.

The truth is these are pretty much not available on normal investing platforms. You won't see it on the big platforms like trading 202 or on free trade for regular, invest or iso accounts, but you will see them for cfd accounts. I actually think this is actually more useful than some of the other ones, and i really want this to be available for regular investing accounts as well, because it is actually really good. The principal's trading stop order is really really simple.

It basically says that if the price, for example, is going up, then you can set a trading, stop sell order for the price to be executed when it falls a fixed amount below any current price in the future. So in essence, as the share price continues going up, then the trading limit can be set to, for example, being fifty dollars below it. So, as the price goes up to seven hundred dollars, your trading stop sale will be at 650. as it goes to 750.

It'll go up to 700, but the moment the share price begins falling back down that minimum doesn't go down; it stays where it is. It only ever goes up in this case, so in essence, it provides you this buffer. So as the share price continues rising over time, it basically means that the stop order that you have continues rising with it until you reach the peak and at that point it stays fixed. So if the price ever then com comes back down to that level, then your shares will sell, and this is pretty handy if you want to make sure that you kind of bake in your gains over time.

But whenever the price begins dropping you then capitalize sell the gains, for example, if you're feeling that the stock is already past, what you think the valuation is, but it's continuing to go up. You may want to use this to go and take advantage of any future hype, and the share price continues to go up, but the moment it begins dropping back down. You might want to begin selling it by setting a close enough. Uh trading stop order.

The same works in the opposite direction as well, so you can choose a trading stop by if the share price is continuing to go down and you're saying i want to buy the moment. It goes up by x from the bottom point. So if, for example, you have the same shirt at 650 and it drops to 600 and drops to 550 - and you have a 50 dollar gap on the training stop by then let's say it's at 500 at the bottom and then it begins climbing back up and It hits 550 at that point, you will buy those shares. I hope you guys found this useful.

If you have, please make sure you smash the like button, video algorithm will really help this video reach more people. Thank you very much for watching. I really really appreciate it and, as always i'll see you guys later.