Newbie in need of help with paper trade account.

[GlenQuagmire]

I am a Newbie and have been dabbling in the market for a few months. I just recently opened up a paper trade account and I need help with some of the ‘bell and whistles’ when trying to place my mock trades.

Mainly I want to buy my stock at or below the opening price, via a limit order option. If I can’t get the stock at my projected opening price, I am hoping to get it at a lower price when the stock dips down at some point of the day. So would I be correct using a limit order, and would my limit order be effective in buying my stock at or below my set limit price (i.e. as long as there are sellers willing to sell at the lower price)?

After buying my stock, I want to sell my stock when it reaches my profit goal. So would I use a stop order? Mainly I do not want to sell my stock if I can not make at least a few dollars above what I paid for it, however I am unsure about the types of orders I should use for buying and selling. Can someone help me?

Also, when placing orders (based on my example above), would I need to place any of my orders as a ‘day order’? Since I have an option for ‘day order’ or ‘good until cancelled’ orders, it seems that I would need to use a ‘good until cancelled’ order every time.

Now based on my paper trade account, I have the option to buy my stocks with ‘market’ or ‘limit’ or ‘stop’ options. Yet since I only want to buy the stock at my own projected market price, it sounds like I would never select the ‘market’ option. Would this be correct?

Any help someone can toss my way would be greatly appreciated. Thank you.

Glen

[LongArm]

Mainly I want to buy my stock at or below the opening price, via a limit order option. If I can’t get the stock at my projected opening price, I am hoping to get it at a lower price when the stock dips down at some point of the day. So would I be correct using a limit order, and would my limit order be effective in buying my stock at or below my set limit price (i.e. as long as there are sellers willing to sell at the lower price)?
Yep. Unless the price turns around and heads back up before your order executes.

After buying my stock, I want to sell my stock when it reaches my profit goal. So would I use a stop order?
Nope. You can't place a stop sell above the current price, only below. You would use a limit sell. A limit sell says "I am willing to sell at $X.XX or higher only."

Also, when placing orders (based on my example above), would I need to place any of my orders as a ‘day order’? Since I have an option for ‘day order’ or ‘good until cancelled’ orders, it seems that I would need to use a ‘good until cancelled’ order every time.
It sounds to me like you want to place your order each day according to the opening price, right? In that case, you'd use a 'day order.' If, OTOH, you had a buy price in mind that you were willing to wait days or weeks for, you'd use a 'good 'til cancelled.'

Now based on my paper trade account, I have the option to buy my stocks with ‘market’ or ‘limit’ or ‘stop’ options. Yet since I only want to buy the stock at my own projected market price, it sounds like I would never select the ‘market’ option. Would this be correct?
Right, you'd want a limit order. A limit buy says "I'm willing to buy at $X.XX or lower only." However, if the price is already at or below your desired price, and you want to get in on the trade as quickly as possible, you might want a market order then.

Hope that helps.

[Florida]

Good description by LongArm, but I would add that once you have opened your position, you could place a "good till cancelled" order with your limit price to sell the stock, so that it will trigger whenever that price is hit without having to re-establish the order each day.

If your platform has it available, I would suggest that once you have a position, you enter a OCO, or "one cancels the other" order to sell your position at the limit price you have chosen, or sell at the stop price you have chosen to protect against unnecessary losses. This type of order will fill which ever one triggers first, and cancel the second one.

Good luck,

[GlenQuagmire]

Thank you Longarm. I appreciate you taking the time to help me fine tune my paper trades & processes. I took time and dissected all of your answers and made myself notes accordingly (that is why it took me so long to reply back). In my case, I will want to use a 'day order' (per your example), because I do not want to wait for days or weeks for my order to fill. Plus thanks for the tip on how I would use a market order over a limit order. Now Based on your answers, I have a few lingering questions.

1. Based on my paper trade site, they basically are running on a 20 minute turnaround to place paper trades (i.e. buys, sells, stops, limits) and deliver a confirmation. Yet I am wondering what is it like trading with real money (turnaround time) . . . because with a stock fluctuating all day, it seems like a 20 minute window can make or break a person . . . I would guess 99% of the time, break a person. Lol! I am not so much worried about turnaround time as I am in regards to how long it takes my order to execute (buys and sells). How long does it typically take an order to fill in ‘real time’? One worry I have, if I submit a buy order after hours (because I want to buy at market price or at a limit price as soon as the market opens) . . . waiting for up to 10 or 20 minutes for my order to fill seems like it would be costly . . . thus causing me to either pay much more on a market order or maybe cause me to miss out on a possible low of the day (on a limit order) . . . all while I am waiting for my order to be filled.

2. This question is more about what happened to me on Thursday and yesterday (09-19-08). On Thursday night, I put in a limit order for 100 shares of a very highly traded stock. My limit was set at $16.50. The stock opened at $17.34, closed at $16.77, and ranged between $16.25 to $17.73 during the day. The daily volume was 3,721,488 and the average volume is 2,070,260. Yet my order was never triggered. So seeing that my order was there before the market opened and the stock reached as low as $16.25 during the day . . . I am wondering if this had been a real trade, would this same thing happen to me? All I can figure is other than my using a paper trade site (maybe things do not work at the lightening speed when doing mock trades vs. real money & real trades), I can not figure out why my order never executed. Yet if this is a regular occurrence when using real money, how do I perfect my orders to get them to execute?

Now seeing how a stop works and since I can not monitor my stock throughout the day, I think I would be better off using a limit order to sell . . . yet I am wondering what I need to do to make sure that my limit order would execute (since my limit order to buy in question #2 did not get executed at all yesterday, though I put in my order on Thursday night)?

Thank you also Florida, I appreciate your help as well. I took notes on your ways to enhance my trades. For sure, I will have to do some homework on that "OCO", as I had not heard of that option before, yet I really do understand in your example how well it would work to protect against unnecessary losses. Thanks again!

Glen