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Monday, May 12, 2008

Question: Order Types (VIDEO) . . .

Challenge Accounts:

Investing Account Balance:
Stock / Futures Trading Balance: $734.39
Online Savings Balance: $27.15

Personal Trading Thoughts: On the bearish side for the short term as far as the Stock market. But not willing to commit at this point. I'm waiting for just a bit more confirmation that this run in the stock market.

In the Futures arena for the Challenge Project, I am 'possibly' looking at a put option in June Lean Hogs. It all depends on how the open turns out at 10:05 a.m. Chicago time, and the action shortly thereafter. It also depends on how the price for the options are looking. The Challenge Accounts cant afford a whole lot . . .

Personal Investing Thoughts: We are fast approaching the end of May. Which means investors generally "walk away" for the summer months. Again, I won't turn my DRIP off this summer to receive straight cash, as many stocks are still 'on sale'. I want the DRIP to benefit from this correction we've had.

I received a question Friday from a viewer I've had for a while now, wawbwc. It reads thus:

"Dan, Can you explain the various order methods? (Limit, Stop, Stop Limit, and Trail Stop). I have read the explanations and I am not comfortable using them. I usually go with Stop Market or Limit orders. What is the difference between Limit & Stop orders? What are Stop Limit orders? How do you set up a Trail Stop? I always hear about using Stop orders to protect your profits. How do you do this? Does a Stop order work like a Trail Stop order? I thought you would be a good person for answering these questions. I enjoy how you explain things to your audience. These different order methods seem a bit excessive. I don't want to make a mistake by trying to use these tools inappropriately. Welcome Home."

First of all, thanks for the welcome home, and the extremely kind comments. I very much appreciate them. I try to explain the different order types in the following video:

(Video Included. If you're seeing this entry elsewhere and cannot see the Video? Click here to view the entry ...)

Edit: For the Challenge Project I put out an order to buy one June 68 Put Lean Hogs at .275 ($110.00) Limit Day Order at 11:14 AM

Now it's hard to track what's going on, because this is an open-outcry pit. But what this means, is if the market gets to .275 on the June 68 Puts - then I * could * be filled. But this means that I will NOT be paying more than .275 ($110.00) for my option; which is vital for the Challenge Projects. Its a Day Order, which means at the close today? The order will expire.

Edit: Which it did. Expired today, without being filled.

* * *

Investing Account Balance: $247.27
Stock / Futures Trading Balance: $734.39
Online Savings Balance: $27.15

Total Trades and Investments: 3
Largest Inter-trade Drawdown: $86.51
Consecutive Losing Trades (Drawdown): 2
Average Drawdown: $82.56
Average Loss: $82.56
Accuracy Rate: 33%
Average Reward: $179.75
Risk : Reward Ratio: 1 : 2.02

This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

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