Markman Capital Insight

About Stocks, Options, Futures

All About Stocks: How to Buy, Sell, Select & More

Buying stocks to take advantage of our equity research services is straightforward. Most of the time, our Strategic Advantage, Traders Advantage and Tech Trend Trader letters recommend buying and selling stocks on "limit" orders that are "good til canceled." This type of order specifies the exact price at which a trader wishes to enter or exit a position, and remains at the brokerage until either executed or canceled. For instance, say Apple is currently trading at $109. An order to buy Apple at $106.00 LMT gtc would only execute after the price dropped by $3. Conversely, an order to subsequently exit at $115.00 LMT gtc would only execute once the price rose $9.00. We strongly recommend against placing "market" orders as the price is subject to market whims.

We recommend "stop loss" orders with most recommendations. At the start of a trade on the long side, this is a level beneath the entry that protects you against a big loss in case the recommendation does not work out. As a trade progresses, we recommend lifting the stop regularly to limit losses and/or retain profits. The only aspect of our stops that can be a little tricky is that we recommend not placing stops in the market until an hour after the session begins. This prevents a position from being lost on stop amid one of the gaps or spikes that often occur at the start of the trading day.

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All About Options: How to Buy, Sell, Select & More

Buying options to take advantage of our options research services is simple. Most of the time, our Tactical Options, Traders Advantage and New Tech Superstars letters recommend buying and selling options on good-til-canceled limit orders that are one to two months away from expiration, and either slightly in the money or slightly out of the money. This approach helps us buy options as cheaply as possible without overpaying for time premium. We are mindful of selecting options that have enough open contracts to allow for an appropriate level of liquidity.

A limit order specifies the exact price at which a trader wishes to enter or exit a position, and remains at the brokerage until either executed or canceled. For instance, an order to buy 3M October $100 calls at $1.10 lmt gtc would only execute if $1.10 is on the ask side of the quote. Conversely an order to sell the calls at $1.60 lmt gtc would only execute if that price hits the ask. Sometimes we will also recommend buying at a specific time, such as 10:30 am, in the event that the initial limit price is not reached and the option does not exceed a specified maximum price.

We typically recommend selling half of a position with a gain of 40% and half at 80% or more. All plays come with stop loss recommendations that start at around -45% and gradually move up to be break-even or protect a profit.

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All About Futures: How to Buy, Sell, Select & More

Buying futures to take advantage of our research services can be a little tricky for newcomers because there are a number of orders don't exist in stocks or options. But they will all make sense and become natural over time. Most plays start with "limit on close" orders. These are limit orders that only execute if they meet the price criteria one minute before the close. S&P 500 E-minis close fifteen minutes after the S&P 500 cash, so a limit on close order to buy one contract at 1992.50 will only fill if that price or lower is on the ask between 4:14 to 4:15 pm ET. Most futures brokerages' software allows you to specific the time of execution down to the second.

Limit orders are used either to play for a reversal higher in a contract that has fallen sharply or to play for a reversal lower in a contract that has risen sharply. In contrast, "stop" orders are used when the system recommend hopping onto a contract's directional momentum move if its velocity and amplitude meets certain criteria. As an example, if the Russell 2000 E-mini started a session at 1020 and the system senses it is going to 1040, it might recommend buying at 1025.25 "stop", which means the contract will only be obtained if it moves up and through 1025.25. Stop loss recommendations are only offered in futures when a position reaches the maximum of three contracts. If a stop loss is filled, the system may subsequently re-enter the position lower. Additionally it's important to recognize that futures are sold in contracts that last one to three months. If the system likes a position but the contract is expiring, traders will receive an instruction to "roll" the contracts into the next series at a specified ratio, or simply by selling the current set and immediately buying the following set. For more specifics, watch the appropriate explanatory video.

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