Now that you understand the basics surrounding chart patterns, order types, and company valuations, let's take a closer look at what's involved in placing an actual order. The layout and process will vary slightly depending on what trading platform you are using, but the key elements of placing an order are the same.

The main elements you should familiarize yourself with are:

• Bid and Ask Price 
• Security Type 
• Buy or Sell Order 
• Order Type 
• Quantity 
• Limit Price (if you have selected a limit order)
• Duration (if you have selected a limit order)
• Bracket Order 

Bid and Ask Price

At any time during the trading day, there is a " bid " and " ask " price on every stock and security. These terms have unique meanings, and it is important to understand them fully:

Bid – the highest price that a buyer is willing to buy the stock for at any given time

Ask – the lowest price that a seller is willing to sell the stock for at any given time 

Spread – the difference between the bid price and the ask price

The bid will almost always be lower than the ask price which causes a “spread”. The spread is also important because it is the implied cost of trading set by the market makers. A narrow spread usually indicates high liquidity and low volatility, and a wider spread usually suggests the opposite. 

What is a market maker?

A market maker is a company or individual that quotes both the buy price and the sell price of a tradeable asset held in their inventory. The hope is that they make a profit based on the spread between the bid price and the ask price. This benefits the market as it helps limit price variation (volatility) by setting a limited trading price range for the assets being traded. 

Most investors and traders are considered “market takers” and will have to sell on the bid (where someone else is willing to buy) and buy on the ask (where someone else is willing to sell). 

Security Type

Depending on your trading platform, you could have a variety of options to choose from in terms of what security you want to trade. The most common security types available to trade are:

• Stocks
• Options 
• Futures
• Forex (Foreign Exchange)

To set your order, select either stock, option contract, or custom strategy. 

Buy or Sell Order

You will be asked whether you want to place a buy order or a sell order. This is straightforward and both terms mean exactly what you think they do. To buy a stock or a security, you want to place a buy order. And to sell a stock or security, you place a sell order. There is another kind of order you can place which isn’t quite as straightforward. You could select a short sell order, but we won’t be looking at that in detail in this course. 

Order Type 

In Section 3, we covered the most common order types. This is the stage where you select the type of order that you want to place – whether it’s a market order or a limit order. If you are having difficulty remembering the difference between these two, you can refer back to Section 3. This is also the stage where you can enter a “stop-loss” or a “trailing stop-loss”. Section 2 has further information on when and how to use these features. 

Quantity

This is another straightforward one – you simply enter the number of stocks that you wish to purchase. 

Pro-tip: As a novice investor, select a low quantity until you’re more comfortable with investing.

Limit Price (For Limit Orders)

This refers to the particular price at which you are happy to buy or sell a stock or security. If you have selected a limit order, this is the stage where you will enter the desired limit price. 

Pro-tip: If you notice that your limit orders aren't being filled or your market orders aren't being filled at a reasonable price, you might find that the bid and ask prices are not accurate. Try refreshing the page or selecting a " spot quote " to get the most current price before placing your orders. 

Duration (For Limit Orders)

If you are placing a limit order, this is where you can set the amount of time that you want your order to remain open. By default, these orders remain open only until the end of the trading day. You can choose to change this by selecting GTC (Good Till Cancelled) or set a specific date by choosing GTD (Good Till Date). 

Pro-tip: If you plan to enter a trade before or after market hours, you’ll have to enter a limit order and select GTEM (Good Till Extended Market). 

Bracket Order

These orders are placed during intraday trading and combine a buy order with a stop-loss and a target order. Since we are not focusing on intraday trading, you don't need to learn about these yet, but it's good to be aware of what they are. 

Within this section, we have learned the practical steps involved in placing an order. In the next section, we will explore the less practical side of trading and consider the emotions and psychology involved in trading.

Lesson Summary

Your psychology and emotional state will greatly impact your success in trading and investing. Initially, you may feel nervous, but with time and experience, trading will become a habit just like any routine task. Manifestation Science shows that your brain can manifest things into reality, indicating the significance of mood in achieving success.

During periods of uncertainty and losses, it's crucial to remember that becoming a successful trader is feasible and losses are part of the learning process. Analyzing setbacks, learning from mistakes, and returning optimistically are key strategies for growth.

• Focus on the person you intend to become
• Cultivate a positive environment
• Read or watch inspirational content
• Save more money
• Reduce your risk

Revenge trading, Fear of Missing Out (FoMO), and panic selling are common emotional responses that can lead to impulsive decisions and losses in trading. Understanding and avoiding these reactions is crucial for success.

• Refrain from revenge trading by calming down and assessing your losses
• Monitor and regulate your emotions
• Identify trading weaknesses and adjust strategies

Fear of Missing Out (FoMO) and panic selling are reactions based on strong emotions that can adversely affect trading decisions. Assessing market sentiment through indicators like the Fear and Greed Index aids in making more informed choices during emotional periods of trading.

Engaging in paper trading to simulate market conditions can help test trading strategies, but real trading with minimal risk is more beneficial for developing confidence and skill. Journaling trades and emotions can also provide insights into strengths and weaknesses.

When holding winning trades, consider holding onto them or adding to positions, while cutting losses early to prevent major setbacks. Avoid adding to losing positions and focus on sound risk management strategies for long-term success. Remember Warren Buffet's advice, "The first rule of investing is don’t lose money. The second rule of investing is don’t forget rule number 1."