What we will cover. Types of orders How to place an order Instruc8ons from the DPR So>ware and what they mean

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2 What we will cover Types of orders How to place an order Instruc8ons from the DPR So>ware and what they mean

3 What is a STOP Order? This type of order is what we use at How Do I Trade Stock.com regularly to ini8ally buy a stock. The stop refers to the price you want the stock to reach before you will consider buying it. At How Do I Trade Stocks.com, we buy stocks using strength as a signal to buy. This means that we wait un8l the market confirms for us that the stock is going up before we buy it. A STOP Order is an order to buy that is entered at a price above the current price of the stock. It is triggered when the market price touches or goes through the stop price we have set. E.g. If the stock is at $45, we may set our stop order (Buy price) to $ So we will get our order filled at around $ When I say at around, I mean it may not get filled at exactly $45.50 because as soon as the price of the stock reaches the Stop order price (Buy price) it immediately turns into a market order and therefore gets filled at the best price available at the 8me. So we may enter the trade +/- at few cents either side of the $45.50.

4 Placing a Stop Order Below is how we enter these in a typical brokerage screen (Questrade is the example): Enter the stock symbol Enter the quan;ty of shares (Whatever it tells you to place from the DPR Tool) Enter the price you wish to buy the stock at Set it to Buy Enter the order type as Stop Dura;on is always GTC (Good Till Cancelled this means that the order will remain open un;l one of two things happens. Either the order gets filled OR we physically cancel the order)

5 The Stop Loss A stop loss is a set price at which we will no longer be willing to hold onto the stock and wish to immediately liquidate our posi8on i.e. sell the stock. Its purpose is EXACTLY what it says to STOP LOSSES. Every 8me we enter a trade, as soon as it is filled, we must set our stop loss as soon as we can. The DPR so>ware will always tell you what the stop loss price should be. Some brokers allow you to do this as you are entering the buying order, others do not, so once you are in the trade, you have go back in and set your stop loss. In addi8on, the DPR so>ware will remind you when you should move your stop loss in order to protect profits you have made. Watch it closely and make sure you don t let those profits slip away! The stop loss is there to give you peace of mind while you go about your daily life that there is a point at which, if the trade is not going your way that you will be automa8cally thrown out of the trade. There is no amount of emphasis that we can put on this to make it important enough. Remember 2008? People lost their shirts because they had no stop losses. Don t ever let that be you.

6 Create Stop Loss Below is how we enter these in a typical brokerage screen (Questrade is the example): Enter the stock symbol Enter the quan;ty of shares (Whatever it tells you to place from the DPR Tool) Enter the stop price here Set it to Sell Enter the order type as Stop Dura;on is always GTC (Good ;ll cancelled)

7 Place Market Order We use this type of trade if we want to get into the trade immediately at the opening bell. We set our buy order to be at market the night before. A market order will always be executed because it does not contain restric8ons on the buy/sell price or the 8me frame in which the order can be executed, so we are guaranteed to get into the trade at the open of the trading day at 9:30am EST. Below is how we enter these in a typical brokerage screen (Questrade is the example): Enter the stock symbol Enter the quan;ty of shares (Whatever it tells you to place from the DPR Tool) Set it to Buy Enter the order type as Market Dura;on is always GTC (Good ;ll cancelled)

8 Get out at market We only use this type of trade if want to get out immediately. We usually only use these to get out at the open of the trading day. A market order will always be executed because it does not contain restric8ons on the buy/sell price or the 8me frame in which the order can be executed, so we are guaranteed to get out quickly. Below is how we enter these in a typical brokerage screen (Questrade is the example): Enter the stock symbol Enter the quan;ty of shares (Whatever it tells you to place from the DPR Tool) Set it to Sell Enter the order type as Market Dura;on is always GTC (Good ;ll cancelled)

9 Addi;onal Instruc;ons from the DPR SoTware No Change This will refer to trades we are in and orders we have placed and are wai8ng to get filled. No change means there is nothing for you to do. Cancel Exis;ng Order If something has changed, we may want to alert you to cancel an order we have set that was wai8ng to get filled. This usually means that the trade is no longer advisable and you should remove the order immediately. Update Exis;ng order From 8me to 8me we may make changes to an exis8ng order we are wai8ng to get filled, so watch out for any changes here. This will only be changes to how many shares, stop loss price or buying price. There will likely be a note regarding an instruc8on of this kind. Update Stop This means that we are 8ghtening our stop loss, usually because the stock has gone up in price. To do this you will typically have to cancel your exi8ng stop loss order (the one you placed a>er you entered the trade). And re- do a new stop loss order on shares you already own. Refer to the Create Stop Loss page for guidance on re- entering a new stop loss.

10 Price Gaps A quick note on price gaps. From time to time, stocks open far away from the close on the previous day. There are a number of reasons for this. The two main instances are when earning results are released and when there is positive or negative news about a company. Gaps can happen on the upside and the downside. For example, if the price of a company s stock closes its trading day at $40 and the next trading day opens at $45, there would be a large gap up on the chart between these two periods, as shown by the picture below. Gap price movements can be found on bar charts and candlestick charts but will not be found on basic line charts. The reason for this is that every point on line charts are connected. So from time to time, as we set our orders to get filled at market price in the morning, we may find ourselves paying more for a stock than we expected to as the price gapped up at the open, or paying way less than we expected as the price gaps down to open lower. We cannot anticipate negative or positive news being released by a company, so we just trade as per usual and set our stop loss according to the new information in the DPR Tool.

11 ANY QUESTIONS? If you are s8ll unclear about any of the types of trades we use or the instruc8ons in the DPR So>ware, please do not hesitate to have a look in the Q&A area of the members area or post a new ques8on in the Q&A area. We are always seeking to provide you with whatever informa8on you need to become a successful trader, if we can improve our tools in any way, please let us know. Anyone who gives us a sugges8on that we implement will be given 2 months free access to their account.