Bullish Limit Buy and Sell
How to enter orders can be a daunting process for new traders, but it doesn’t have to be. Bullish trades can be entered in a few different ways but one of the easiest is a “Bullish Limit Buy” order. This type of order tells your broker that you only want to buy shares of a stock when the price goes lower, to a specified level. Let’s say AAPL is trading at $150 on September 14th. You like AAPL and you decide that you would like to own shares. Instead of setting up a “Market” order where you buy at the price in the current moment, you set up a “Limit Order” at $140.50. By setting up this order AAPL stock has to drop $9.50 for you to get filled. If the price of AAPL drops to $141.27 your order will not fill because it has not gone to your limit buy price. If a few days later AAPL drops to $140.50 your broker will fill your order and you will now have AAPL shares. Great, now what?
Now, since you already determined your plan and your risk on this trade before you entered your first order, it’s time to set up your sell order. The “Limit Sell” order will work the exact same way as your “Limit Buy” but in reverse. A “Limit Sell” order tells your broker that you only want to sell shares of a stock when the price goes higher, to a specified level. Buy low and sell high right? Since you just bought shares of AAPL at $140.50 let’s say you want to sell at the previous all-time high, which is $157.50. You enter the “Limit Sell” in your broker at $157.50 which will not trigger until AAPL reaches a new all-time high and hits your limit sell price. After holding AAPL shares for a few weeks your limit sell is triggered as AAPL makes a new ATH passing your $157.50 price and selling your shares for a nice win.
With a few clicks you were able to make $17 dollars per share by utilizing your “Limit Buy” and “Limit Sells” entries. On 100 shares that would be $1,700! Now you know how to buy shares of companies at a low price and sell at a high price without constantly monitoring your account. As you get more advanced in your trading and order set up, there are many different orders that help with risk management and automation.
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