Chapter 17

Understanding Brokerage Orders and Trading Techniques

In This Chapter

arrow Looking at different types of brokerage orders

arrow Trading on margin to maximize profits

arrow 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).

In 2008, millions of investors were slammed mercilessly by a tumultuous market; many could have used some simple techniques and orders that could have saved them some grief. Investors who used stop-loss orders avoided some of the trillion-dollar carnage that hit the stock market during that scary time. As a stock investor, you can take advantage of this technique and others 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.

Checking Out Brokerage Orders

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

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