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Strategies & Market Trends : A.I.M Users Group Bulletin Board -- Ignore unavailable to you. Want to Upgrade?

To: OldAIMGuy who wrote (10500)	3/20/2000 10:46:00 PM
From: LemonHead	Read Replies (2) \| Respond to of 18928

Hi RH & Tom, Okay we're on the most Wanted List at SI again. That's great, means the juices are flowing... But we need a clarification on this Stop Order issue. At WaterHouse and I bet the others there are Stop Order's and Stop Limit Orders. There is a difference... I'm not at the office where my notes are, but will explain the differences as I remember them. Read the definition first... Stop Order - A stop order is an order designed to protect a profit or guard against loss. Although it does not work well in all conditions, it can be an effective strategy in certain situations. When placing a stop order, you specify a stop price that, when reached, converts your order to a market order. For example, you may have purchased a stock at $30 and it is now trading at $50. If it drops to $40, you want to sell the stock. You can place a sell stop order at $40, and if the stock trades there, your order becomes a market order to sell. The risk with this type of order is that once triggered, your order can be filled at any price because it is a market order. For example, if a stop order is in place before the market opens, and the stock opens at $20, your order will be triggered and executed far below your original stop price. *Stop Limit Order* - A stop limit order is a variation on the stop order. It works in a similar fashion in that it is triggered once the stock hits the stop price, but instead of becoming a market order, it becomes a limit order at a price that you select. For example, you want to limit losses on a stock that you purchased at $50, you enter a sell stop limit order at "$40 Stop $39 Limit." Once the stock trades at $40 or below, your order becomes a limit order to sell at $39. This will ensure that you do not sell at an extremely low price if a stock opens drastically lower. However, you will still own the stock since the order was not executed. Each of the above orders has its pros and cons. You should pick the order that is best for your situation and considers current market conditions. Now here is how I remember the conversation with WaterHouse. You can do a Stop Order on line with Web Broker but you have to phone in Stop Limit Orders. They assured me that it was not a big deal and they would charge the same $12 if you actively traded on their system. FWIW... Keith