Don’t Worry, Be Happy! Trade automation makes trading easier and helps keep your emotions out of the picture. Setting up orders in your trading platform to exit your trade when your target is reached or if the trade goes against you just makes good sense.

Let’s explore some of the automated trade orders.

Stop Market

(Stop/Stop Loss- depending on the Brokerage language)
This is a 2 part order where you set a stop price that will, when reached, execute your market order. Your order can be a buy or a sell.


Stop Limit

This is a 2 part order where you set a stop price that will, when reached, place your limit order. This order will be sent to the trading floor to sell your stock or option at your limit price or better.   If the stock bounces and trades above/below (in the direction of your trade) your limit price, you will get filled.  Stop Limit orders DO NOT protect from potential gaps.


Contingent Order

When you place a stock or option order, you can choose to place contingencies on that order. This means that the order will be sent to the trading floor only when a specific price point or set of criteria has been reached.  Contingency orders are typically placed on stock movement but can be placed on option movement on most trading platforms.
Examples of Contingency orders are OCO (Order Cancels Order), OTO (Order Triggers Order), OSO (Order Sends Order)

Trailing Stop

Using a trailing stop allows you to let profits run while cutting losses at the same time. Trailing Stops are more often used in stock trading but can be used in option trading on some brokerage platforms. The trailing stop price is adjusted as the price fluctuates A Trailing Stop is only good for the current trading day and would need to be reset the following morning based on the stock’s opening price.


Stop Alerts/Alarms

A ‘Stop Alert/Alarm’ can be set on most brokerage platforms in today’s environment.  If the stock should trigger an alarm price, the full service broker is directed to call the trader to ask for instructions or an online broker will send an email, screen pop up window or text message to your cell phone to notify you that your alert/alarm has been reached. More traders are self directed these days and most online trading platforms have the ability to set these alerts to come via email, sms or popup on screen.

The point of knowing all of these layered order types is so you can automate your trades. When you have identified your trade candidates, know your entry, target and stop; you can set up ATM (Automated Trade Management) in your platform to carry out the trade plans you have already made.

A misconception is that you need to be in front of your computer all day long in order to trade. Not True! With practice and appropriate ATM set up, you can trade and have a job too! Or simply run errands if you need to.

Learn how to trade and keep your emotions from sabotaging your well thought out trade plans. Learn more about these ATMs from Rob Roy teaches trade management in all of his classes. Start with Power Option Plays.