Executing Trades

Trade Execution...Pushing The Buttons

The EdgeTrades systems will identify which stock to buy or sell.  It is your responsibility to determine the correct quantity, place the buy order, place the stop loss order, and at the appropriate time, place the sell order.   

There is a certain amount of discretion that you can use when executing your trades. Depending on your situation, you can choose to just place the trades without much thought or you can try to gain an additional advantage by focusing on your trade execution.  This section covers some of the situations that will be encountered.  

If You Are Just Starting Out

If you are a beginner just starting out in trading, here are some tips:
  1. Make sure you understand:  
    • The various order types (e.g. limit, stop, market, bracket). and when to use each.
    • Bid/Ask spreads
    • Partial fills 
  2. Familiarize yourself with the features of your brokerage platform. 
  3. We strongly encourage you to get a few good books on the subject.
  4. Try to stay, as best as you can, within the requirements of the system.  Just follow the signals.
  5. See if you can understand why the system is identifying the trades that it finds.
  6. Keep a log.  You will benefit greatly by keeping details notes on your trades: 
    • Keep accurate accounting records of your buy and sell trades.
    • Watch the market and keep track of any patterns that you notice. 
    • Record your thoughts and feelings as you progress.
When Entering a Position:

The hypothetical results trade at the "Open".  However, it is unlikely that you will get the opening price.
  • Sometimes the price will continue to fall from the prior day's close.  You can simply try to get a price near the open price or try to wait for the selling to subside after the first few minutes.
  • Sometimes the price will gap up from the prior close.  Depending on how large a gap, you may want to use some discretion.  If, for instance, the price has a really large gap up (2%-5%), you probably want to pass on that trade altogether.
  • We DO NOT recommend Buy at Market orders.  This order basically states that you don't care what price you pay.
  • We do not recommend Market at Open orders either.  There could be a very wide bid/ask spread and you could be paying way too much.

When Exiting a Position: 
  • Normal Sell Signal:  Trade at the next day's Open
  • Stop Loss: Set up automatic stops, with your broker when entering the position..  Do not move your stops based on emotions such as fear.
  • Break Even Stops:  After a position has moved in your favor by 1%, you can move your stop to break even.   This avoids the problem where profitable positions turn negative. 
  • Do not ignore any Sell signals simply because the position is still in the red.  When the system says sell, you sell.
Advanced Users: 

As you become more familiarized with the EdgeTrades system, you will notice that the system signals a Sell after a big single day pop in the stock price.  In some cases, you may want to close the position the same day of the gain at or near the Close instead of waiting for the next day's open.  


 



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