The Different Types Of Trades & How They Can Work For You

Once you’ve gotten yourself acquainted with financial markets and the basics of investing, you should quickly become familiar with a few trade types to help you manage risk.

Because at the end of the day, market orders are only so useful.

If you’re going to really start investing and taking your portfolio seriously, you need to at least manage how much you’re paying for stocks when you buy them.

How Do Stocks Trade?

On the Rapunzl App, when you place an order to trade a stock, we place your trade at the most recent trading price for that symbol.

In the real world, things work a little differently.

For starters, there’s something called the Bid and the Ask. The Bid is what investors are willing to pay for a stock and the Ask is what investors are asking to sell the stock. So when you look at the price of a stock on Google, you’re really seeing the most recent price the stock traded at, but that doesn’t mean the next time the stock trades, you’ll also receive that price.

The price you pay for a stock, will usually be somewhere between the Bid and the Ask, which is known as the Spread. For a lot of large, popular companies, the spread is usually a few pennies. But on less traded stocks, spreads can be much wider. So if you just place a Market Order, you have no idea what price you’ll actually end up paying.

So how can you protect yourself?

The most basic trade on Rapunzl is called a Market Order. Market Orders…

Now let’s say you wanted to set a maximum price which you’re willing to spend per share? That would be called a Limit Order.

Stop Order

It’s important to note that Open Orders are actually Market Orders which we save and execute for your portfolio when the market opens. You may have noticed with Open Orders, that they do not execute immediately at 9:30am ET when the markets open.