The most common types of orders are ‘limit orders’ and ‘market orders’.
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In most trading platforms you will receive a warning when using a market order. Although your trade will be executed at the best possible price, when you place your order, you will not know what the exact price will be. It may differ from the last traded price.
Once you have decided which share you want to buy, you are ready to place your first trade. You can place a trade by selecting a trade ticket within the platform from your broker. The first decision we need to make is whether you want to buy directly in the market using ‘market’ order or whether you want to use a ‘limit’ order indicating the price you are willing to pay.
Once your trade has been executed, the share will appear in your portfolio. It is up to you now, as an investor, to decide at which level you want to sell the shares. You can apply a limit order to do this or you can use a more advanced type of order such as a trading stop or stop ‘loss’ order. With this type of order you decide in advance at what level you want to stop the position and secure your profit or minimize your loss.
Investing in shares has become much easier compared to 15 years ago. It’s important, however, to use common sense and not get too excited. Think carefully about the risk on different levels of your portfolio. The combined risk of all the elements in your portfolio and the risk on instrument level. Take note that all instruments also come with their individual risk. For example small caps versus large caps. The key is to diversify the spectrum of your investments.