Types of orders to buy and sell stocks.

You can place different types of orders when buying or selling a stock. The main types are:

Market Order - an order to buy or sell a stock at the best bid or ask WHEN the order gets to the market. Unfortunately, this is the most widely used order when it should really be the least used. Most people place this order because they think that it will get executed the fastest. This is not true. Even though this order will guarantee you an execution, it can be dangerous and can get you into or out of a stock a lot later than everyone else. Avoid using a market order as much as possible.

Limit Order - an order to buy or sell a stock at a specified price or better. This is the order that should be most frequently used by traders of all types. Unfortunately, it is not. The reason is that a lot of people are afraid that this order might not get filled (executed), so they place a market order instead. Even though it is true that a limit order might not get filled (since it does not guarantee you an execution), once the trader learns approximately at what price to place it he will achieve an execution the great majority of the times. The advantage of a limit order is that once the order is executed, it will be at an acceptable price to the trader. This outweighs the slight disadvantage of not getting filled some of the times, and often makes it possible to obtain better prices than with a market order (and faster executions).

Stop Order - this is an order that becomes a market order when a specified price (stop price) is reached. It is almost as if the stop order had an alarm or activation feature that, once triggered, sent a market order to the market. This order can be used to limit the loss or protect the profit of a trade. The buy stop order is placed above the current price for the stock and the sell stop order is placed below the current price of the stock. In a direct-access RealTick system, enhanced versions of the stop order can be placed. This can be a very beneficial feature for a day trader, especially one who is starting out and needs to build discipline limiting his or her losses.

If you are not familiar with any of this information it doesn't matter. Slowly you will begin to understand all of the things you need to know to learn how to day trade.