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How to Enter a Trade

Most of the trades I recommend will come to you after the market close in my daily update newsletter. Whenever I recommend a trade, I'll tell you what I believe is the best way to initiate the trade. It will be at the current market price or at a specific limit price.

Those types of recommendations require different execution styles, so please read carefully to learn what you'll need to do each time I provide you with a new recommendation.

If I recommend you buy a position at current market prices, chances are the stock is in a well-established trend and ripe for us to jump on for profits. Whenever I recommend a trade with instructions that simply say, "Buy," that means I want you to buy at market price at any time of the day.

If I recommend a specific buy-under limit, it's usually for one of two reasons. We could be waiting for confirmation of a trend, which would be provided when the investment breaks into our desired price range. Or we're waiting for that specific price limit because anything beyond that could jeopardize the current trend and possibly nullify my reason for entering the trade, thus capping our profit potential. The limit order provides the cap we need to ensure that we don't pay too much for the position, even amid trading volatility.

If my recommended position does move in price before you are able to enter it at my recommended limit, then you'll have to use your own discretion to determine whether you still like the opportunity. If the current price already is close to my recommended target price, then it's probably best to pass because there likely isn't much profit opportunity left in the trade to make it worth your while. But if the potential gains between the current price and my target price are appealing, then the trade still may make sense to you.

Note that here at Trader's Advantage, we follow the guidelines set out in my trade instructions, so if you enter a trade past my limit price, you will have to manage it yourself because we will not be in the trade. I usually have at least two or three new trades for you every week, so don't worry if you don't get into every single recommendation. There's no harm in waiting for a fresh idea, and the next one will be coming soon enough.

To recap, here's what to do when you see new "buy" instructions:

"Buy" means you should buy at market at any time during the trading session.

"Buy under $X" means you should set a limit order to enter the trade at that limit price. This order can take effect at any time of the trading session.

If the price moves past the limit order, evaluate the difference between the current price and my target price to determine whether you want to enter the trade.

To read about how to exit a trade, click here.

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