Buy Order Concepts
A systematic process of placing orders is often ignored by traders — to their detriment. Order placements that are governed by a broker’s call or “gut feelings” offer little hope for profit. All good trading systems are based on rules and view the market in terms of the following long and short options. Here are some key components of trend following order concepts:
- BUY – Buy to open a long position. Specify quantity & price.
- SELL STOP – Sell to exit a long position. Specify price.
- BUY MORE – Buy more to add to a long position. Specify quantity & price.
- REVERSE – Exit long position (SELL) and open a short position (SELL SHORT). Specify quantity & price.
Sell Order Concepts
- SELL SHORT – Sell to open a short position. Specify quantity & price.
- BUY STOP – Buy to exit a short position. Specify price.
- SELL MORE – Sell more to add to a short position. Specify quantity & price.
- REVERSE – Exit short position (COVERSHORT) and open a long position (BUY). Specify quantity & price.
Ideally, you wake up knowing exactly what your if-then-contingencies are for each of the order situations above. Of course you still need to have a successful trading system in place so you have a context and structure for placing your orders, but these order concepts are crucial for any successful trading style.
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