Podcast: How To Actually Place A Trade

Benzinga has partnered with Fidelity to bring you the Fidelity Investing Podcast, a podcast that offers quick insights from Fidelity subject matter experts about the world of investing. Conversations will last around 10 minutes and will cover everything from how to place an order to what to look for in a stock. Catch the latest episodes on iTunes, Google Play, Soundcloud, Stitcher, or tunein. 

 

In Episode 3 of the Fidelity Investing Podcast, we chat with Tyler Konesky, a member of the Trading Strategy Desk, about how to actually make trades. In particular, he walks us through placing a trade and explains the types of orders you can use. 

 

What To Look At On The Order Ticket

 

So you’ve decided to buy a stock. Great! After you’ve looked at the current trading price of a stock, the next step, says Konesky, is to identify the Bid and the Ask, which he explains as follows.

 

“So at the very basic level, the bid is essentially going to be what other people are currently willing to buy a product for and the ask is what people are currently willing to sell the product for,” Konesky said.

 

 

The difference between the two prices, known as the spread, can give you an idea of how likely it is that you’ll get the exact price you want. Stocks with tighter spreads are generally traded more actively than stocks with wider spreads. As such, they’re easier to get in and out of. 

 

A tight spread, according to Konesky, is generally between $0.01-$0.05, though it also depends on the price of a stock. 

 

The Different Types Of Orders

 

We also go over the two most common types of orders you can place: market orders and limit orders. 

 

With a market order, Konesky explains, speed takes priority over price. Your order gets executed immediately, and you’re essentially paying whatever the current ask price is. 

 

“So I really like this stock and, we’ve talked about the price spread, we talked about the bid and the ask, if we go out there and take the market price when I’m buying a stock, I’m going to take that ask price,” Konesky said. “Whatever that ask price is when I fire in that order, that’s probably what I’m going to get in terms of the price that I’m paying for that stock.”

 

A limit order is somewhat the opposite of a market order. For limits, price takes priority over time. 

 

“We saw Tesla at $329 and change when we were looking at that ticket,” Konesky said. “Well, maybe I think that’s a little bit higher than I want to pay right now, maybe if it drops down to $325 that’s what I’d like to buy it for.” 

 

However with limit orders, you do run the risk of your order never executing if the stock never reaches your order price. 

 

You can hear all of Tyler’s advice on how to place a trade in the full episode. And be sure to subscribe to the podcast on iTunes, Google Play, SoundCloud, Stitcher or tunein for the latest episodes.