I am new to trading and do not understand the difference between a stop limit and a stop loss. What is the difference between the two order types and when should each be used?

How to Buy a Stock - TheStreet

CEO Chris McCann takes TheStreet inside its command center to show how they handle the holiday rush. If you want to send your sweetie over the moon this Valentine's Day then forget a gold or platinum ring. Go for iridium instead. Nvidia crushed Wall Street's consensus earnings and revenue estimates in the fourth quarter.

There's a subtle, yet important, difference between stop-loss and stop-limit orders. And it matters most when things, as they occasionally do on Wall Street, get a little out of control. A stop-loss order becomes a market order when a security sells at or below the specified stop price.

Understanding Different Stock Order Entry for Investors

It is most often used as protection against a serious drop in the price of your stock. A stop-limit order becomes a limit order -- not a market order -- when a specified price level has been reached. That's why a stop loss offers greater protection for fast-moving stocks.

Orders Explained - Pg. The surest way to lose money on Wall Street is to search for the so-called big score. And to try to do so using options? Well, in that case you might as well donate your money to charity, because you obviously won't be holding it for very long. Let's say, for example, that you had a dream around March 16 that fictional ABCD Corp.

Patrick's Day, March You have no evidence of this deal, because that would be insider trading, but your vision was so clear that you are willing to risk some Mad Money on it. And, as luck would have it, March 17 also happens to be an options expiration date, because it's the third Friday of the month. So, with visions of this deal dancing in your head, how can you earn the maximum return by putting down the least amount of money?

The seller of the call is obligated to deliver sell the underlying stock at the option's strike price when the buyer exercises his right. That's where the leverage comes in for the big score.

Then you wake up the next morning to see that, praise the lord, the fantasy deal came through. There you have it. In the end, your lottery ticket paid off 10 times over.

Because all the shamrocks in Ireland won't give you enough luck to make this trade more than a dream. Of course, there are ways to increase the chances of a so-called lottery ticket paying off, either by increasing the amount of time before expiration or by lowering the strike price.

But if you want to wish upon a star, that's how you can do it. Just don't do it with my money. Action Alerts PLUS is a registered trademark of TheStreet, Inc. You are using an outdated browser. Please upgrade your browser to improve your experience. Jim Cramer's Best Stocks for Most Recent Trade Alert. Subscribe Access insights and guidance from our Wall Street pros. Find the product that's right for you.

Orders Explained Gregg Greenberg. Mar 11, 7: Prev 0 of 2 Next.

Feb 14, 7: Forget Gold and Platinum! Give Your Sweetie Iridium this Valentine's Day If you want to send your sweetie over the moon this Valentine's Day then forget a gold or platinum ring.

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3 Order Types: How and When to Use Them

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