Limit Orders – How To Effectively Sell Short

I’ve done my best to explain this on several occasions…”oh how I’ve tried to explain this!”

But you humans….crazy humans – so anxious to “hit those buttons” so “spurred by emotion” compelled to “buy buy buy” or “sell sell sell” on a moments notice. If only for a minute you could learn to slow things down, you’d quickly realize – you’ve missed nothing, there is no rush, the markets move far slower than you think. Everything will be O.K, and “even better” –  if you could just manage to control your emotions.

If you are considering placing an order on a particular asset “short” (with hopes that it will fall in value) there are most certainly ways to go about this without “losing the farm”.

You need to understand how/why to place “limit orders”.

Limit Orders – How To Use Limit Orders

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A limit order is an order to buy or sell a set number of shares at a specified price or better. A limit order guarantees price, but not an execution.

So for example…..If I see a particular stock priced at $108 per share, and I have some idea that said stock is likely to fall in value. I don’t just “sell short”! I look to place a “limit order” to sell at a set price LOWER than the current value of $108!

If in fact the stock price falls ( lets say my order was to “limit sell” at 107.50 ) then great! I get my order picked at 107.50 and am well on my way! If the stock shoots for the moon and I was totally wrong in looking to go short…..my “limit order” does not get picked up….I am not in the trade….the stock rockets to $120.00 and I am left with no trade…..but a perfect example of “no trade….being a great trade”.

Limit orders allow you to “take your shot” – but only on momentum moving your way. If price doesn’t move in your direction – you don’t get picked up!

Use ’em –  I know I do.

Several of’em currently lying in wait.