Trading stocks can eat up a huge chunk of a person’s time. In certain the trading world, it’s much better to work smarter not harder.
Time is such a limited resource and if we spend all our time in front of the screen trading stocks, we’re going to get burnt out and that’s just no way to live day-by-day.
I will share 3 resources that you can use when trading to minimize your time and maximize your gains:
Many traders want their systems to trigger a certain number so that their order can fill a sale of an asset.
The current price is at $1.45 per contract and if I want to protect my profits, I can set a stop-loss order for $1.30 in case it drops to that point.
This is an excellent strategy to know what your limit is. You can minimize your risk while being away from the screen doing whatever you’d like.
A downside to stop losses is that the price may dip and then come right back up, but you don’t have a say because you set the stop loss.
The upside to stop losses is that your $1.45 contract could dip to $0.40 and by this point, you’ve lost more than 50% of your position because you were away.
I utilize stop losses on bigger trades (over $1,000) because my risk tolerance is around 10–15% stop loss per trade. Only in certain cases with longer contract time do I refrain from setting stop losses. The key here is time-saving.
Limit orders are excellent for buyers who want to purchase an asset at a specific price. In this example, NVIDIA is trading above $645.
With a limit order, you can set your purchase price at $640 and if the price triggers your desired target, the order will fill.
There’s no need to sit in front of your computer praying it’s going to hit your target price. This is a time-saving method that allows you to do what you’d like with your time and have the robots do the work for you.
If you’re someone who sees a dip in a stock that you like and wants to buy it at the exact price it’s currently trading for, then market orders for you.
In this example, GameStop is trading -5.31% below the opening price for the day. It’s a good buying opportunity for you to “buy the dip”.
With a market order, you are purchasing the stock for the price listed on the screen and that’s the exact price you’ll own your shares at.
This is the typical method for purchasing stocks, but it’s still good to understand how it works.
Trading stocks has its intricacies. These are the three most common tools a retail investor would utilize, but there are far more available if you want to get complex.
Saving time is the common theme among all three of these tools in trading. Good luck in the markets everyone. Let’s all make money!