LogFAQs > #936595315

I can teach you guys. I had the same questions and it took me weeks (and a missed $7,000) to learn.

LIMIT: Set a limit at a price that you want to BUY a stock. It can be above or below the current price. If Stock X is currently at $3.00, you can set a limit at $2.95 (if you think itll go down a bit and then rise) or even $3.05 (if youre unsure whether itll explode and want in on the action early). Typically set a limit when a stock has been going down but you expect it to go back up, and you want to make sure you get it at a low price.

STOP: Set a stop at a price that you want to SELL a stock. It can be above or below the current price. If Stock X is currently at $3.00, you can set a stop at $2.95 (if youre fearful itll continue going down so you mitigate your losses) or even $3.05 (if you think this is the peak before it goes down). Typically set stops when a stock is rising and continually increase the stop price along with the stocks increase.