How to place your first trade

A trade has four decisions: direction, size, where you get out if you are wrong, and where you get out if you are right. Decide all four before you click.

• Market order — executes immediately at the current price. Use when you want in now.
• Buy limit — a pending buy below the current price (you expect a dip then a bounce).
• Sell limit — a pending sell above the current price.
• Buy stop — a pending buy above the current price (you want confirmation of a breakout).
• Sell stop — a pending sell below the current price.

A stop loss closes the trade automatically if price moves against you by a set amount. A take profit closes it once your target is reached. Never place a trade without a stop loss — it is the only thing that guarantees a small loss stays small.

1. 1Pick the instrument in Market Watch and open its chart.
2. 2Decide your direction and the price level that would prove you wrong — that is your stop loss.
3. 3Set a take profit at least as far away as your stop (a 1:1 reward-to-risk minimum; 1:2 is better).
4. 4Calculate the lot size so the stop costs you 1% of the account or less.
5. 5Open the order window, enter volume, stop loss and take profit, then confirm.
6. 6Record the trade in your journal and leave it alone until one of your two levels is hit.