Fast Facts: Trading Stocks In A Fast Moving Market

The U.S. Securities and Exchange Commission warns investors that buying and selling "hot" stocks that have the tendency to rise and fall quickly can be dangerous if unexpected delays occur. Without even realizing it, investors can find themselves losing money.

Just because you can access your account online, doesnt necessarily mean that your trades are instantaneous. Limit your losses in these fast-moving high tech markets by:


knowing what you are buying
understanding the risks involved in your trade
know the trading process for fast-moving markets

Guard against some of the most common problems investors encounter in fast-moving markets.

Market Orders vs. Limit Orders

When stocks drop or soar suddenly, being stuck in the process of trading can mean the difference between making a sizable profit, and losing a bundle. Delays can develop in fast-moving markets, slowing down executions and trade confirmations. What you thought you were selling at one price, may be end up selling for quite another. Avoid buying and selling at prices higher or lower than you expected by placing limit order instead of a market order. Limit orders are executed automatically when they reach a set upon price, unlike a market order which is filled at the price that second, not necessarily the price set at purchase time.

For example, when you place an order for a $10 stock, placing a limit order will ensure that you dont end up paying $35. The same is true for selling. The stock will sell when it hits the target limit, eliminating sudden losses. The risk here is a loss of control to hold certain stock just a little longer in the hopes that it will continue to rise. Once it hits the selling target, it is sold.

Remember, online trading Isnt Instantaneous

Trading online can feature its own dangers. Problems with modems, servers, or delayed broker-dealer hardware can all cause a delay or failure in an immediate stock trade. Know what trading alternatives your firm offers (telephone, fax, etc), in the event a technological problem interrupts your transaction.

Avoid Double Buying/Selling

Too often investors mistakenly think that their order did not go through and place another order. This can cause them to buy stock they did not want, or even sell stock they did not own in the first place. Be sure to check with your broker on what to do if you arent sure if your trade has gone through.

Choose the Best Broker

Buying and selling in a fast-paced market takes a broker whos capable of handling transactions quickly. There are no Securities and Exchange Commission rules that require any trade to be executed in a specific amount of time. Finding a broker that doesnt delay is up to you, the investor. Take your time and research brokers carefully in order to avoid losing important assets unexpectedly.

By: Bob Freeman

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For the past ten years Bob Freeman has been helping people build more money in their retirements. Now he has taken his successful strategies to a new level by offering teleseminar courses to help people make a better retirement for themselves than they ever thought possible. For more tips and strategies see www.retirementwealthforyou.com or click here.