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| mrbradg |
 Posted: Tue Feb 21, 2006 5:03 pm Post subject: SCOTTRADE ? |
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Investing Sr. Associate
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| I was wondering if you can put in 2 limit sell orders on a stock at one time? Say one to protect you from a down fall of a stock and one to make sure you get the profits when its high at the price you desire. Ok thats the first question. Second if an order is not processed, say you both and go another route or even better you make that sell limit on high, will I get charged for each order or only the ones that went through? Thanks a lot! As always, Brad |
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| Dave Rathbun |
| Posted: Tue Feb 21, 2006 9:10 pm Post subject: |
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CFO
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I believe what you're looking for as far as protection on the down side is a stop loss order. This is not a limit order exactly, and not all brokers offer them. I like working with numbers, so let's put some out there.
Suppose you buy X for $20. It goes to $30. You don't want to sell for less than $25. If you put in a limit "sell" at $25, it's going to fill right away because the market price is above your limit sell price. That's not what you want. What you want is a stop-loss order at $25. That tells your broker that you don't want to sell at $25 right now, you want to sell at $25 when it becomes a market order. Meaning when the price drops to $25, it converts from a stop-loss order to a market order and is executed immediately. You can see how that would provide the protection that you're looking for.
Now on the high side you can go ahead and enter a limit order to sell at $50. Brokers that I have worked with will cancel limit orders if they have not hit within 90 days, but you will not be charged for the order if it is cancelled, only if it is filled.
So back to the scenario. You buy at $20, put a stop-loss at $25, and the stock is currently at $30, and you have a limit sell waiting for the stock to hit $50. You're now on auto-pilot, and at least for 90 days can sit back and know that you should do no worse than $25 and could sell at $50 if / when your stock hits.
Uh oh. Bad news. The company president runs off with his secretary to the Cayman Islands the day before the SEC realizes that the company is a shell with no real assets. The next day the stock opens at $5. You will not get $25 for your stop-loss order because the stock never traded at that price. You'll get $5, or whatever the market price was. Remember that a stop-loss becomes a market order once the price is passed, so don't think that a stop-loss is 100% guaranteed order at a set price.
What if it's good news? You go on vacation, and when you return home you find out that the company is being bought out by their competition for $80 a share. Oops. Your limit order gets placed at $50, and you lost out on $30 in gains. So that's a disadvantage of a limit sell order.
What is really nice is a trailing stop-loss order. With a trailing stop-loss you don't have to watch the stock, and you don't have to set a limit sell on the high side. Back to the numbers.
Buy at $20, current is $30. You enter a trailing stop-loss for $25. Now every time the stock goes up $1 your stop-loss goes up a $1 as well. If the stock drops, your stop-loss holds at the highest point. So if the stock goes to $35, your stop-loss is now $30. If the stock drops to $31, you're still holding a sell order at $30. If the stock rebounds to $40, you're up to $35 for your stop loss. When the buyout offer hits, the stock jumps to $80 and your stop-loss goes to $75. If the stock drops down because of one reason or another, and hits $75, you sell, and you're out.
I am hoping that we will be able to implement limit orders soon on the simulator, and would love to see stop-loss and trailing stop-loss limits as well. |
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| mrbradg |
| Posted: Wed Feb 22, 2006 4:49 am Post subject: |
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Investing Sr. Associate
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| Wow ok thats something I'm going to have to print out. Thanks for your time on that answer. You have answered my question, now I have to just let it set in! Thanks again. Cheer's, Brad |
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| Dave Rathbun |
| Posted: Wed Feb 22, 2006 5:14 am Post subject: |
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CFO
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| mrbradg wrote: | | Wow ok thats something I'm going to have to print out. Thanks for your time on that answer. You have answered my question, now I have to just let it set in! Thanks again. Cheer's, Brad |
You owe me a hint. 
http://www.einvesting.com/viewtopic.php?t=2298 |
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| Benjamin |
| Posted: Wed Feb 22, 2006 6:43 am Post subject: |
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Administrator
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| For the heck of it while buying ARLP I tried to put two buy limit orders. One below the current price and one slightly above. It said I couldn't do two because there were not enough funds. So at least when you put in a buy order those funds are no longer liquid. |
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| efflandt |
| Posted: Wed Feb 22, 2006 5:31 pm Post subject: |
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Investing Manager
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Does Scottrade have any way to do "conditional" orders, where if one executes (like a sell) you can have that trigger another order (like a buy)? Or a conditional order where if one executes, it cancels the other (where you can enter conditions to buy 2 stocks and if one executes, it cancels the other)?
At Fidelity that is not on the normal trade screens, but if you view your portfolio positions, besides "Trade Stocks" (and mutual funds, options, etc.) there is a "Trade Conditional" link that allows you to do Contingent Trade (triggered by stock price or an index), One Cancels the Other, or One Triggers the Other. If that is available at Scottrade, maybe you have not found it.
Fidelity takes extra precautions for "One Cancels the Other" in retirement accounts to avoid having both triggered in a fast market. But they warn that you do not have that protection in a non-retirement account (both might execute). |
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| loose555 |
| Posted: Tue Aug 31, 2010 11:02 pm Post subject: |
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