Stock Investing For Dummies®, 3rd Edition

Chapter 18. Understanding Brokerage Orders and Trading Techniques

In This Chapter

• Looking at different types of brokerage orders

• Trading on margin to maximize profits

• Making sense of going short

Investment success isn't just about which stocks to choose; it's also about how you choose those stocks. Frequently, investors think that good stock picking means doing your homework and then making that buy (or sell). However, you can take it a step further to maximize profits (or minimize losses). As a stock investor, you can take advantage of techniques and services available through your standard brokerage account (see Chapter 7 for details). This chapter presents some of the best ways you can use these powerful techniques, which are useful whether you're buying or selling stock.

Just before the stock market bubble of 2000 popped, I warned my students and readers that a bear market was on the way. All the data warned me about it, and undoubtedly, it seemed like a time for caution. Investors didn't have to necessarily believe me, but they could have (at the very least) used trailing stops and other techniques to ensure greater investing success. Investors who used stop-loss orders avoided the carnage of trillions of dollars in stock losses. In this chapter, I show you how to use these techniques to maximize your investing profit.

Checking Out Brokerage Orders

Orders you place with your stockbroker fit neatly into three categories:

• Time-related orders

• Condition-related orders

• Advanced orders

At the ...