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Lesson 10. How Much Stock to Buy and How... > Determining How to Buy Your Stock - Pg. 53

How Much Stock to Buy and How to Buy It 53 Determining How to Buy Your Stock In virtually every movie I see that has a stock market scene, people are screaming "Buy, sell, limit, stop, market order," and so on at the top of their lungs. (Usually these same people are also involved in substantially more intrigue than ever happens on the stock floor, but that's another matter.) Here we finally get to clear up the confusion regarding the terms used in purchasing and selling stock. Contrary to popular belief, these terms are not interchangeable and they actually do mean some- thing. After you've decided to buy stock in either a round or an odd lot, you need to tell your broker how to order the stock. Plain English Orders are instructions given to a broker to specify under what conditions stock should be bought or sold. Consider Timing Your first consideration is the amount of time in which you allow your broker to complete the trans- action for you. Say that you want your broker to buy 100 shares of XYZ Company, but only if the broker can do it today, because tomorrow, for whatever reason, you don't want him or her to continue to attempt to complete the transaction. This instruction is known as a day order. The vast majority of all transac- tions is done as day orders, partly because, unless the investor specifies that the order should remain open longer, it is assumed to be a day order. Another reason for the preference of day orders is that most people want their transactions performed now, not in the future, because of such factors