This document discusses different types of stock trade orders: 1) Market orders execute at the market price at market close and can be risky if placed early in the day before prices are set. 2) Limit orders specify the maximum (buy) or minimum (sell) price and only execute at or within that limit. 3) Short selling "bets" that a stock price will decrease by borrowing shares and selling them immediately, with the goal of buying them back later at a lower price to cover the short position and make a profit.

1. Placing Stock Trades
Trading 101

2. Market Orders
• The simplest and most frequently used order
type.
• These orders tell the game that you wish to
purchase the stock at whatever price is at the
market close (4PM)
• Market orders placed early in the day can be
“dangerous” because we never know where
the market for that stock will be at 4PM

3. SMG Trading Platform

4. Limit Order
• A buy limit order specifies a price that you are
willing to pay for a company stock. The order will
not go through unless it is at or below your limit
price. “I don’t want to buy XYZ for more than
$10.”
• A sell limit order specifies a price that you are
willing to sell the shares for. The order will not go
through unless you it is at least or above your
limit price. “I don’t want to sell XYZ for less than
$14.”

5. Limit orders require a limit price

6. Short Sell
• Shorting a stock constitutes a “bet” on the
downside. You believe the stock will go down so
you short sell the stock.
• Essentially, you borrow the stock from the SMG,
and sell it immediately at a price you feel is too
high.
• When the short sale is executed, the cash from
the sale is placed into your account.
• You will use that cash later to cover the short
position and make a profit.

7. Short Sell
Short
Sell

8. Short Cover
• You opened a short position by selling a stock short
(short sell).
• When you close your short position, you enter a short
cover order. This will return the shares back to the SMG
(which you borrowed in the first place).
• Essentially, you use the money you got when you
borrowed the stock from the SMG and sold the stock
short at a high price.
• For example, you short sell the stock at $10 and then
short cover at $5… in this scenario you make $5

9. Short Cover

10. Questions?
Market, Limit, Buy, Sell, Short Sell,
Short Cover