First time investor about to make first trade - stop limit order question

eater · #1 (**permalink**) 10-30-07, 09:26 PM

Hello forum members,
I am a first time investor of stocks. I have most of my money in an index fund, but am now looking to make some riskier investments in the stock market. I opened an account with Scottrade and want to purchase stocks of an online ad company (mchx) at a specific price or lower ($10.60). I believe this is called a limit order. At the same time, I would like to have insurance that this stock will automatically be sold if it goes below a certain price ($9.80). Is this called a stop order? I have attached an image of the trade ticket. Is it filled out correctly so that it will purchase at or below $10.60 and sell if the stock falls below $9.80?

Quick unrelated question: I have not added any funds to my Scottrade account yet, but they require a $500 minimum balance. Does this mean $500 must be invested or just in the available funds? Will they charge me for not having $500 in there?

Thank you and I look forward to becoming a part of this great community.

Stocktrading101 · #2 (**permalink**) 10-31-07, 02:53 AM

Hey Eater!

Welcome the community and I will be happy to help you out.

Scottrade wants you to deposit $500 minimum in, but that is it. So you can have all $500 invested in a stock and have $0 in cash and you are still ok. The reason they ask for a minimum deposit to trade is make sure you are serious as a client. Hope that answers that.

Secondly, when placing that order what you are going to do is first take the position as in buy it with the limit order, then once you actually have the position you fill out a new order for the stop loss. Basically, they are two separate orders. The reason you can't place both at the same time is because you can't technically sell something you don't own yet.

Hope that helps, look forward to seeing you around more often!

eater · #3 (**permalink**) 10-31-07, 03:23 AM

Thank you that answers my question very well. BTW, I've been reading a lot of your posts at stocktradingtogo.com and it's really a great source of info. Good job!

Stocktrading101 · #4 (**permalink**) 10-31-07, 04:59 PM

Quote:

Thank you that answers my question very well. BTW, I've been reading a lot of your posts at stocktradingtogo.com and it's really a great source of info. Good job!

Glad you enjoy it

This forum will be moving to the site here in the next few weeks so it should be pretty exciting.

rhinodude47 · #5 (**permalink**) 11-06-07, 01:28 AM

This was a help for me to as I was wondering the same thing. Thanks for the explanation Blain.