What Is a Closing Order in the Stock Market

Document Sample
What Is a Closing Order in the Stock Market Powered By Docstoc
					  Stock Market Game 2

I’m ready to pull the trigger, now what?
             Trading Stocks
   Buy Order
   Sell Order
   Short Sell Order
   Short cover
               Order types
 Market Order - You pay the price at the
  close of day.
 Limit Order - You set the price for what
  you’re willing to pay or take (if you’re
   If the price reaches this point the trade will
    be made.
 The cost of a share of stock is set by the market,
  in which the stock trades.
 End of Day Game transactions are priced at
  market daily closing prices.
 SMG does not permit buying stocks or mutual
  funds that trade below $5 per share
 In the SMG, 2% is charged to all trades as a
  brokerage commission.
    100 shares at $10.00 per share = $1000 + 2%
       (100x10)1.02 = $1020
 The value of your stock is equal to your
  purchase price, less the fees (in the previous
  case; $1000 - 2% = $980
 All buy orders must be a minimum of 100 shares.

 Sell orders for less than 100 shares will
  be permitted.
 A 2% broker's fee is charged for all
  transactions. For example, if you buy 100
  shares of a stock at $10 per share, you
  must pay the 2% of $1000 or $20.
                   Short Sell Orders
   Selling short is a trading strategy that’s designed to take advantage of an
    anticipated drop in a stock’s market price.

   To sell short, you borrow shares through your broker, sell them, and use the
    money you receive from the sale as collateral on the loan until the stock price

   If it does, you then buy back the shares at a lower price using the collateral, and
    return the borrowed shares to your broker plus interest and commission. If you
    realize a profit, it’s yours to keep.

   Suppose, for example, you sell short 100 shares of stock priced at $10 a share.
    When the price drops to $7.50, you buy 100 shares, return them to your broker,
    and keep the $2.50-per-share profit minus commission. The risk is that if the
    share price rises instead of falls, you may have to buy back the shares at a
    higher price and suffer the loss.

   During the period of the short sale, the lender of the stock is no longer the
    registered owner because the stock was sold. If any dividends are paid during
    that period, or any other corporate actions occur, the short seller must make
    the lender whole by paying the amount that’s due. However, that income is
    taxed at the lender’s regular rate, not the lower rate that applies to qualifying
    dividend income.All short sell orders must be for a minimum of 100 shares.
Short Cover

Shared By:
Description: What Is a Closing Order in the Stock Market document sample