Most traders are very comfortable using limit orders and market orders, however there is another order type that can help broaden your stock trading options. This stock trading tutorial will briefly cover the use of conditional orders.
Conditional orders are based on a user defined set of criteria. You can set up any condition that suits your trading style. One of the main benefits of setting a conditional order is the ability to set up the trade and walk away. Let’s say you have identified a coloration between the price of a gold ETF and the price of a certain mining stock you are interested in trading. You could use a conditional order to buy your stock based on the price movement of the gold ETF. Instead of having to sit in front of your computer for the entire day monitoring the price of that ETF, you could set up your trade to watch the conditions for you.
During the course of your stock trading career you will notice many correlations that may give you a slight head start on a good buy signal. Being able to set up the trade to execute without having to eagle eye the market is very valuable.
Another valuable conditional order is called the “one triggers other” order. In this scenario you can set up two trades but the second will only execute if the first one does. This can be valuable for riding the “waves” of the market. If you have a couple of stocks in your portfolio that you want to buy and sell on opposite patterns this can be the perfect order type. You could set up a trade to purchase one stock at a certain price point and then automatically sell the other stock in your portfolio.
It will take some time getting used to all of the possible trade types using these types of orders, but the expansion in your trading skill will be worth it. For more tutorials about stock trading you can visit stocktradingtutorial.org