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RE: Timon has answered your question

by , 24 April 2019
RE: Timon has answered your question
Q. “I want to understand trading in a simple way, as I don't understand much about trading. Please can you answer the following questions.

1. What does an entry level mean?

2. What is a stop loss level?

3. What is a take profit level?

4. How do you cancel a trade that hasn't been taken?

5. How do I confirm that I have exited a trade?

I would appreciate your help Timon.
 
 
A. I'll answer the above questions in order.  
 
1. What does an entry level mean?
 
An entry level is a price level you'll BUY (go long) or SELL (go short) in order to open and execute a trading position. There are two entry orders you can choose from.  
 
A market order – Gets you into your trade at the best possible price the market is currently trading at. 
 
Limit order – Gets you into your trade, only if the market trades through the price that you choose to enter (limit to).
 
2. What is a stop loss level? 
 
A stop loss is a price level you'll choose in case the market goes against you. Once this price level hits, it will take you out of your trade for a loss or for a small profit if you raised your stop loss at a later stage.
 
3. What is a take profit level? 
 
A take profit level is the opposite of a stop loss level. This is a price level which you’ll place, should the trade go in your favour. Once the market price touches your take profit level, it will get you out of your trade for a profit.  
 
4. How do you cancel a trade that hasn’t been taken?
 
The only way you can cancel a trade from being taken, is if the trade order is still pending where the order hasn’t been filled. 
 
There are two ways to cancel a trade from being executed. First you can go onto your trading platform and cancel the pending trading order.  
 
Note: Call your broker so they can show you how to cancel a pending order.  
 
And second, you can call your broker and ask them to cancel the trade you want that is currently pending.  
 
5. How do I confirm that I have exited a trade?
 
After you’ve placed your entry, stop loss and take profit price levels, you’ll then let the market take over.
 
Once the market price trades at the take profit or the stop loss level, you’ll see that your trade should be closed out completely. Call your broker to confirm and ask them where, on your trading platform, you can see the current trades that are opened.
 
Recommended: 
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Here's what a loyal Trading Tips reader has to say:
 
"Thank you so much Timon for the recommendations and sharing your knowledge and experiences about trading.
 
In your mails I receive, it really sounds easy and straight forward the way you explained it. You sent a very good step by step guide on how to execute and place a trade order" 
 
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Q. “Timon you said that you expect the banks to rally in the next few months, does this also apply to a bank like Capitec?” 
 
A. Yes most definitely.
 
As I expect the banking index to rally in the next few months, the banks that will most likely drive it up are the five top banks listed on the JSE.
 
Capitec happens to fall under one of the top five banks in South Africa. These are the five banks with the highest market capitalisation (Share price X Number of shares listed).
 
Here are the bank’s market capitalisation in order.  
1. FirstRand (FNB) R265.89 billion
 
2. Standard Bank R231.36 billion
 
3. Absa Bank R121.65 billion
 
4. NedbankR103.86 billion
 
5. Capitec R94.16 billion 6.
 
“Wisdom yields Wealth”
Timon Rossolimos,
Analyst, Red Hot Storm Trader
 
PS: If you have a burning l trading or an investing question or you'd like to share your feedback about us, feel free to email me at timon@fsp.co.za and you'll stand a chance to be featured in one of the Trading Tips articles. 


RE: Timon has answered your question
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