♫ Background Music ♫
Narrator: In this video,
we will show you how to place your first trades using market and limit orders.
When you are viewing a stock or an ETF chart, you can easily add a stock to
your order entry screen on the right side by clicking the green Buy/Sell Button.
You can also do this from other stock quote overview windows.
You’ll notice that most of the information for your order is pre-filled automatically
in the order entry screen. For our sample trade today, we will leave the quantity at 100 shares
but to change this you would simply type over with the amount you’d like to buy.
You can set different default amounts or trade any amount of shares that you’d like.
However, you cannot trade partial shares so every trade must include a minimum of one share.
There are a few different types of orders, but for this video,
we will focus on the two most popular: Market and Limit Orders.
For this first order, we will be using a Market Order.
A market order is an order to buy or sell a stock at the best available price in the current market.
They are considered to be the simplest type of order. If you remember back to the bid
and ask prices in video 4, if you use a market order to buy a stock, you’ll pay
the ASK price or very close to it, as it’s the lowest price sellers are currently accepting.
If you use a market order to sell a stock, you’ll pay the BID price or very close to it,
as it’s the lowest price buyers are currently accepting.
Market orders can be filled or completed almost instantly.
However, they can have some drawbacks when trading investments that have low volumes or
have wide gaps between the bid and the ask price (also known as having a large bid/ask spread).
Let’s go ahead and place our sample trade buying 100 shares of Apple with a market order.
You’ll notice that with a market order, you do not have to enter a price.
This is because you will be paying the best available price in the market at the
time you place your trade. When it comes to buying a stock, this will be the Ask price.
The duration isn’t relevant for a market order;
but will be important when making a limit order, which we will talk about shortly.
Once you click the green Buy button,
before your order goes through you will see an order confirmation window.
In this window, you will see the summary of your order and you can also see which account
you are trading in. This is in case you have multiple Questrade accounts. Most importantly,
you can confirm the trade value and any commission for the trade.
You can also see any ECN or SEC fees (those are fees charged by the exchange to execute the order)
that may be associated with the trade. Not all trades incur these fees,
you can check on our website to learn more.
Once you hit send order, you should receive confirmation that your order was filled or
completed very shortly. With a market order it will fill almost instantly.
That's all you need to know to place your first trade. In this example, you can see the shares
of Apple appear in the Positions tab below the order entry box, after your order is filled.
Before we check on our positions page to review all of our new holdings, let’s go through
another example. This time trading an exchange traded fund, also known in short as an ETF.
For this example, we’ll search for SPY in our symbol look up box.
SPY is an ETF that tracks the price of the S&P500 index in the US. Remember,
this is just an illustrative example for educational purposes, and there are a wide
variety of different ETF types, that track popular benchmarks, indexes and investing strategies.
In general, you can think of an ETF as a basket of assets.
It can include stocks, bonds, real estate and other types of assets.
Now let’s review how you can buy an ETF, using a limit order as an example.
For this example we will be using a limit order, which allows you to set the price you would like
to buy or sell a stock at. When using a limit order you will choose the specific price but
your order may not complete or fill, if what you’re buying doesn’t reach your price target.
In this example, SPY’s ask price is around $300. If you put in a limit order to buy,
that is the same or higher than the ask, you’ll pay the ask price.
But if you input an order that is lower than the ask price, $295
your order may not fill unless the ask price drops and reaches your limit price.
The duration of the order will determine how long your order is active for. A day order is
valid from the time the order is entered until the end of regular trading hours on that day.
If the ask price does not reach your limit price by 4pm, the limit order will automatically cancel.
There are other durations available if you would like your order to stay active longer.
This can be useful if you think the stock price will reach your limit price in the
next few days or even weeks. The most common durations are Day or GTC (good till cancelled)
as it allows the order to be in effect for up to 90 days.
For this example, let’s stick to 100 shares of SPY and to keep things simple we will use a
limit price that is very close to the ask price so that the order will be more likely to fill quickly
Great! We just received confirmation that our limit order has been filled.
You just learned to place trades with limit and market order. We hope you found this
video helpful! If you're looking for more information about your Questrade account,
we have many other videos to help you get familiar with your account and the platform.