Long Strategy

 

A Long Strategy is a strategy to buy and then sell a security with the expectation that the asset will rise in price. The Trade Strategies tool can help you create a plan to:

 

1) enter a stock only if certain conditions are met and
2) exit the stock to either maximize profit or minimize loss.

Create and Execute a Long Strategy

  1. Select Trade Strategies from the Features drop-down menu.



  2. The Trade Strategies window will appear. Click the "Add" button to create a new trading strategy.
  3. The Wizard-Select Strategy window will appear. Three strategy options are available: New Long Strategy (buy), New Short Strategy (sell short), and Existing Position (sell all or part of a position you already hold).

    Select New Long Strategy. Indicate the stock symbol and quantity you wish to trade, and click "Next."



  4. The Wizard-Entry Trade window will appear. This window helps you frame a strategy for buying or selling a stock. Specify the price you want to receive and the market conditions that must be met before your order is placed. You can also specify market conditions that will cause the strategy to automatically "abandon."

    The strategy shown below can be read as follows:

    "Entry Trade -- Buy 100 shares of CSCO if the stock falls to $19.85. This is a market order. Abandon the entire strategy if the stock falls below $19.05, or if it rises above $20.02, or if entry is not achieved by 11 a.m. EST."

    After you have entered your strategy, click "Next" to proceed.

  5. The Wizard-Exit Trade window will appear. This window helps you form a strategy to sell the stock once you own it. Set two "Exit" strategies: one to sell for a profit, and one to minimize loss should the stock move against you.



    "Profit Trade" is a strategy to sell the stock if the stock moves in a favorable direction. In the case of a "Buy," the price will be higher than the price at which you bought.

    "Protective Trade" is a strategy to sell the stock if the stock moves against you. This strategy helps minimize losses. In the case of a "Buy," the price will be lower than the price at which you bought.

    The strategy shown below can be read as follows:

    "If the stock rises to $20.05, sell the stock as a market order; OR if the stock falls to $19.75, sell the stock as a market order. Both strategies expire at the end of the trading day (3 p.m. EST). After you complete your exit strategy, click "Finish."


  6. After you complete your strategy, the Wizard returns you to the Trade Strategies window. The strategy you created is added to your "Trade Strategies" list. "Edit" or "Remove" the strategy by selecting its name and clicking the "Edit" or "Remove" button.


  7. To submit your strategy for execution, select the strategy's name, and click "Submit Selected." "[Ready]" will appear next to the strategy's name, indicating that your plan will go into effect the moment market conditions match your specifications.

Monitor Your Strategy

Your strategy can be monitored from the Trade Strategies window.

A Status indicator is provided next to the strategy name. If the strategy has been submitted, " [Ready] " appears next to the strategy name. Otherwise "[Not Submitted]" (strategy not sent to the Trade Strategies server and made active), "[Entering]" (initial order has been placed), "[Entered]" (initial order has been completed), or "[Completed]" (exit order has been placed) is listed. Errors such as "[Entry Failed]" and "[Exit Failed]" are usually followed by an explanatory message.

 

Strategy details (including the Entry Order, Exit Order for Profit, Exit Order for Loss, and any Abandon strategies) are listed in green. Executed Elements (parts of the trade that have been executed on the market) appear in bold print as they are completed. A unique Trade Order Number appears next to buy and sell orders as they occur.

View Positions and Trade Details

As with all other trades, information about orders executed through the Trade Strategies window can be found in the Portfolio. To access this information select Portfolio from the Feature drop-down menu, and click the Positions, Open Orders, Activity, or Trade Journal tab.