Selling to avoid loss.

Justin said: "I have a couple of logistical questions that I can't really find the answers too, all of the information I have read is broader in scope and doesn't address the finer points. I'm kind of outlining a situation and I'm putting questions within. 1. Lets say I have an online trading account with one of the places everyone mentions (Scottrade, Ameritech, etc). 2. I log into my account when the Stock Market opens for the day and I decide to purchase 10,000 dollars worth of stock in Company X. 3. Yesterday Company X closed at 50.00 dollars a share and that is what I want to purchase the shares at. At this point, how quickly will my trade go through to the point where I have the stocks? Is it instant? Does it take an hour? Will I get my shares all at once or in chunks and at slightly different prices? 4. I set "boundaries" on the stock for my low sell price and my high sell price (I'm not sure what this is called but I know it exists). Lets say I want to be really conservative and I want to set my low sell price at 49.98 and my high sell price at 50.50. Is what I outlined in part 4 a viable scenario? Is that even possible? Furthermore, if the price starts to dip (and assuming that Company X has over a million shares of Volume a day) should the bottom sell price work properly? Further questions: When a broker says they have a $7 charge per trade, do they mean just a solid chunk trade? So for my scenario I choose to spend 10,000 dollars on buying, and then selling everything at a price that I set. Is that just 2 trades in a day for a total of 14 dollars? My instinct tells me something is incorrect about my scenario. It seems too easy and fool proof. There HAS to be a problem, I just can't figure what it is. Any help is appreciated."

HappyHarry said: "Basically it works like you explained it. Stop losses are set to the amount you want to sell at, either above or beyond your purchase price. In this way, you can automate trading. Trades are generally instant in the even of market orders and can take some amount of time in the case of limit orders (until the target price is triggered and the sale occurs)."

Justin said: "Ok, a couple more things because my brain is hot with ideas right now. 1. From what I understand my earnings from stock sales cannot be taxed unless I actually cash out the account from the broker and have the money in my hands. Correct? 2. In general, when trading with companies with massive daily volumes, I can basically pick whatever price to sell/buy at and it will occur as I wish?"

HappyHarry said: "1) As soon as the stock is sold, you're liable for the loss or gain. 2) Yes, stocks with great liquidity can almost always get you your price"

Justin said: "Yeah after I read Harry's response I did a bit more research and found out exactly what you just stated. Thanks for this though, very informative. I suppose a Day Trader would have quite an effort on his hands by the end of the tax year!"

alhamid said: "one year i made 300 trades and the paperwork was a nightmare! plus i lost $1400 after trading $700,000 of trades..lol"