Market-on-the-Open Orders These are simple, self-explanatory orders entered before the opening to buy at the market as soon as the market opens. Typically, a great deal of activity characterizes market opens, but in thin markets this activity could result in a reasonably bad price fill. Some market analysts and advisors have strong sentiments against buying on the open, thinking the opening is not necessarily a good reflection of market activity. Indeed, on many occasions in the past, traders have witnessed significant reversals after a strong opening in a given direction. Certainly, if our order was on the buy side on a sharply higher opening during one of the reversal-type days, then we would indeed be in jeopardy or vice versa during a sharply lower opening (see Chapter 11). If you trade through a broker as opposed to electronically, then you must specify to your broker what you want to do. The broker then executes the order for you on the opening. To place such an order electronically, all you need to do is enter an order at the market immediately on the opening of the day session trading. Remember to make sure that such orders are accepted by the exchange. Stop Orders Stop orders are orders that are either above or below the market. They are described in the following sections. Buy Stop This is an order to buy at a given price above the market. When the indicated price is hit, your order becomes a market order and is filled at the best price possible thereafter. Such orders are used to exit a short position or enter a long position on market strength. stock investment guide ~ online trading |