Buying and Selling Stocks

Updated 6/18/2007

When I first stated trading the Short Term Stock Selector system my main concern was the spread between the bid and ask price. The cost of buying and selling stocks can mount up. For short term traders the spread can make a tremendous difference in overall profitability and I therefore designed the system to minimize this as much as possible. I've used several brokers and there are differences in how they execute trades. I currently use eTrade ($5 market orders and $10 limit orders) and would heartily recommend them as they execute in a manner consistent with way we place trades on our website.
Following are recommendations, with regard to our system, on how to place your stock orders through your broker. Buying and selling stocks doesn't have to cost you an arm and a leg. For reference, all Nasdaq stocks in our database have 4 or more letters in their symbol while NYSE stocks have 3 or less letters.
Placing orders on NYSE stocks:
You should place your order before the market opens in the morning. The order should be a market order rather than a limit order. Placing an order in this manner assures that your order will be executed at the opening price. It is very important to note that buy orders and sell orders placed in this manner are executed at the same price. This eliminates the usual spread between the bid and ask price after the market opens. At times eTrade will actually give you a slightly better fill then the recorded opening price. I'm not sure how they are able to do this but it happens fairly frequently.
To place such an order simply contact your broker and place a buy at market or sell at market order early in the morning before the market opens.
Placing orders on NASDAQ stocks:
Unlike the NYSE, buy orders are not matched with sell orders at the open on the NASDAQ. Before decimalization was introduced the spread on the NASDAQ was ridiculously high and I didn't trade NASDAQ stocks. If you check the first few years of our Trading History you will see that we didn't trade NASDAQ stocks. After decimalization was introduced the spread on the NASDAQ was reduced to very manageable levels, in most cases 1 cent per share. I then personally started placing NASDAQ trades and also started including NASDAQ trades on the website. I buy NASDAQ stocks immediately after the market opens. Sometimes I'll go with a market order and sometimes I'll go with a limit order. It depends on the spread between the bid and ask price.

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