Tag: investment risk

What Is a Stop Loss Order? Why Use It? And Why Not?

pexels-photo-159888.jpegYou may have noticed that your online broker offers a few order options when purchasing a stock or other security. I wrote in my review of the Robinhood app that many reviewers on the App Store blamed Robinhood for paying too much for a trade when the real problem was that they did not understand and properly utilize Robinhood’s limit order option.

If you simply post the default market order, your order will go through at whatever price your broker and another trader agree upon a few seconds or minutes later, which might not be the same market price you see on your screen. That could be frustrating if the price goes up in that short period of time, which is not unusual.

A limit order makes sure that your trade won’t go through any higher than a certain price. If the price of the security goes up between the click of the order button and when the trade actually happens, the broker won’t buy it for more than the customer wants to pay for it. It will wait for a cheaper trade to be available or the order to expire.

There are tons of order types being used in today’s technology-driven trading environment, most of which the average investor does not even know about. Commercial investment brokers like the popular online ones usually only offer a few order types, and it is probably for the best, as we are about to see how complicated they can be.

A novice might notice that his broker offers the option for a stop loss order and wonder what that means. He could hit the ‘help’ button or Google the term to see what it is, and at first glance it may look like an interesting idea. Let’s dig deeper into what it is and what the broader implications of it are before we use it to make a major financial decision. Continue reading “What Is a Stop Loss Order? Why Use It? And Why Not?”

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Sector Study Session

Let’s explore some potential investing strategies in 4 different stock sectors: technology, healthcare, energy, and real estate. We’ll start with tech, which had a huge drop today worth serious examination. Continue reading “Sector Study Session”

New Articles Posted This Week

Have you been to the Gaking Finance resources page yet? It has sections for articles, books, links, and videos. I have been adding new content almost every day. For example, I have added some fantastic investing resources to the articles page this week:

  • 3 Country ETFs to Consider
  • Beware of Concentration Risk in Country ETFs
  • Busting the Frontier-Market Myths
  • Chart: Where Is Global Growth Happening?
  • Creating Alpha With Smart Beta in the US: Focus on Quality
  • Emerging Markets Are Not All Created Equal
  • Owner Earnings: Warren Buffett’s Favorite Formula

This library will keep growing, so keep checking back for more.

How the Next Bust is Brewing

Check out my article, “How The Next Bust Is Brewing,” which was just published by Seeking Alpha. It covers…

  • Consumer credit scores have reached a record high.
  • The mistakes that caused the 2008 financial crisis are falling off credit reports.
  • Credit card debt remains on the rise.
  • FICO is lowering the standards for achieving a high credit score.
  • The average American household is a higher credit risk than it appears to be.

These are very concerning developments that every investor should be aware of.