These online stock trading, option trading and day
trading lessons are
available to TradeWiser Members.
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Investopedia |
A online dictionary of investing terms. The next time you hear a trader
talking about a "Dead Cat Bounce" or a "Butterfly Option" you'll be able to find a definition. |
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TradeWiser Bookstore |
A huge selection of books (for investors) at affordable prices. The
person who doesn't read has no advantage over the person who cannot read. |
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Stock Market Simulation |
Free stock market simulation game. |
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Hard Right Edge |
20 Golden Rules for Traders. |
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Mr.Swing |
Free lessons in swingtrading. |
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Daytraders.com |
Free daytrading strategies. |
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Mtrader |
Free daytrader learning plan. |
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Pristine |
Free stock market educational reports. |
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Rookie Day Trader |
The free day trader classroom. |
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Career Day Trader |
Free trading articles. |
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Daytrading University |
Free sample lessons from Daytrading University. |
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Chart School |
Learn technical analysis - the examination of past price movements to forecast future price movements. |
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A market order is instructing your broker to buy or sell as quickly as possible at the
current market price. A limit order instructs your broker to buy or sell at a certain
price as soon as the price of the stock reaches the price level you have specified.
Limited orders can be entered as "Good until Cancel" or "Good for that Market Day Only."
A stop loss order tells your brokerage to close your position if the trade goes against
you for a certain amount (that you specify).
You can enter stop loss orders for both long and short positions. A long position is when
you buy a stock anticipating the price to rise. Beginners should know that if they enter
both a stop loss order and a limit sell order (at the same time) on a long position, it
could possibly result in both the limit sell you desired, and a short sale you did not anticipate.
Back to FAQ's
You can choose to trade your account with
margin enabled or not. With margin, you have twice the buying power as you have cash.
The brokerage simply lends you the money. You only pay interest if you hold stocks overnight.
If you have an IRA account you cannot enable margin or short stocks on that account. Most
brokerages will have a list of highly volatile stocks that they will not let anyone trade
on margin and neither will they let you short these.
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You simply borrow stock that you do not own
(from your brokerage) and sell it with the obligation to buy it back at some point in time,
to cover your short sale. You sell a stock short anticipating that the stock will go down and
you will buy it at a lower price than you sold, thus making a profit. When you enter a sale
order for stock you do not own, your brokerage will automatically consider it a short sale.
Some smaller brokerages may not have a large enough customer base to allow you to borrow stock
to short. Some traders never short because of the unlimited risk involved. TradeWiser.com believes
that traders will benefit from learning to use both long and short positions. But with that said,
we also urge beginners to become profitable with long positions before going short. If you are on
the right side of the market, it makes no difference whether the market goes up or down.
Downtrends in the market frequently take place sharper and faster than uptrends. This happens
because more traders play the market from the long side than do traders who trade both long and
short. Bull markets don't continue forever, so learn to short.
Back to FAQ's
If you short a stock at $50 anticipating
that it will go down to $45, but instead it goes up to $100 before you cover, then you have
lost all the money you had in that stock. If it were to go up to $150 before you bought to
cover your short, you would have lost twice the money you had invested.
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