Can someone help me with stock trading terminology?
January 25th, 2010
I’m learning how to trade stocks online. When I go to the website, there are five ways to order: ‘market’ (which I think means I buy and sell the stock at the market price), but what about ‘limit’, ’stop limit’, ’stop’, and ‘trailing stop’? And re: transactions, I can buy and sell, but what does it mean to ’short’ and ‘cover’? (How are those different from buying and selling?) And for duration, there is ‘day’ and ‘GTC’–to what do these refer? Thanks for any help you can offer.
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Posted in Stock Market Software | 
Tags: duration, gtc, stock, Stock Terminology, stock trading, stocks, Trade Stocks, trailing stop
here’s the best to my knowledge, though I strongly recommend doing a lot more research, reading and getting sound advice from seasoned investors…
limit = a parameter (e.g., price, length of time before it can be cancelled) that you place on the shares that you intend to buy/sell
stop limit = when the stock reaches your limit price, the order that you give (buy or sell) is executed
stop = when the stock price goes beyond a particular point, this order becomes a market order
trailing stop = similar to a stop order, but has a set percentage, instead of a particular point (and will therefore move with the market price)
short (selling) = selling stocks that you do not own (with borrowed money from the broker), but assuming that you’ll be able buy these shares at a lower price
cover = completing the transaction (e.g., buying the stocks from the short sales)
GTC = "good ’til canceled"; your order to buy/sell at a particular price will expire at the end of the trading day if you do not provide this instruction
…happy trading!
Hey. Just go to http://www.investopedia.com and bookmark it. It will answer all these questions and more that you will habve in the future.
Limit: How much you are willing to pay. if it does not hit this price, you do not buy it.
Stop Limit: How much you are willing to lose
Short = You believe the stock is over priced and sell it at a higher price and will buy it at a lower to replace the shares you sell.
Cover: Buy the shares you shorted
Day = Good until close of business
GTC - Good until you cancel it.
Market, is the going rate, you never buy at market, you sell a losing position at market.
Limit, you specify the price you are willing to buy or sell.
Stop limit, or stop loss, is a price you want to trigger if the price goes the wrong direction.
Trailing stop, you set a dollar amount or a percentage the stock must fall before it sells, that way you can still let the stock rise in value.
SHORT, you sell stocks you don’t own hoping the stock will go down allowing you to buy at a cheaper price to COVER the short.
You buy to open and sell to close, or vise versa on short positions.
Day order, is only good until the end of the trading day.
GTC, good til canceled, the order stays open until you cancel it or 60-90 days.
The answers you’ve received are very good. I’d like to stress one more thing.
Don’t put a penny into the market until you’ve read 2-3 books on investing. It will save you thousands in losses and $10,000’s in fees.
Do the right thing for yourself. Invest. Don’t gamble.("giving it a try" before learning… is gambling).