The Anatomy of a Stock Trade
How to Make a Trade
Now that you know a bit more about how to set price targets and when to buy or sell a stock, it’s time to discuss what exactly you need to consider to make a trade.
The Name of the Security
To research the stock and make a trade you’ll need the stock’s ticker symbol. A ticker symbol, also known as the stock code, consists of one-to-five letters depending on where the stocks are traded. Because ticker symbols are unique to their companies within the market, they provide for accurate identification of a stock.
While you’re practising on SprinkleBit, you can type the company name in the app’s search box to find out its ticker symbol. Or type in the ticker symbol if you know it already.
The Type of Transaction You Want to Make
First of all, to make a trade, you need to pick your transaction type — what you’re attempting to do with the stock. Simply put, do you want to buy or sell?
The Type of the Order
Here’s where you need to decide whether the order is a market, limit, stop or stop-limit order, and for how long you want the order to be valid. You can find more on different order types further in this chapter.
The Number of Shares You Want to Trade
The number of shares you’re going to trade will factor into the total amount of your transaction based on the market value of the stock.
Another important factor in every trading transaction would be the commission you’ll need to pay.
A commission is a brokerage fee charged by a broker for executing the trade on your behalf. Commissions are a crucial part of each trade, as they have a potentially significant impact on the amount of the transaction, especially if the value of the transaction is small. That’s why it's a good idea to factor in commissions as you set your price targets.
The Market’s Trading Hours
All stock markets have their regular hours. Both the New York Stock Exchange (NYSE) and the Nasdaq normally operate between 9:30 a.m. a 4:00 p.m. Eastern Time. Most trades take place during these hours, although some trading does occur outside these hours. It’s called pre-market and after-hours trading.