Introduction to Robinhood's stop loss, limit order, market order, and other operations

I've recently noticed that many people around me who trade stocks are using Robinhood, and I've even written an article introducing its advantages and disadvantages (《《》). Compilation of Basic and Introductory Knowledge about US Stocks/Futures I've always felt that Robinhood's features weren't comprehensive enough, only suitable for casual play; it wasn't ideal for more complex operations. However, I recently discovered that it can perform operations like stop loss, which felt like discovering a new world. Actually, with this feature, it basically meets the needs of most amateur users.

As an aside, the reason stop-loss orders are so important is due to the inherent risks of the stock market. Whether you're a casual investor or a professional trader, you likely have your own theories and analytical methods. However, predicting the future is never 100% accurate. When unforeseen events occur, stop-loss orders are crucial. Many newcomers suffer huge losses because they don't understand the importance of stop-loss. Their typical thinking is, "It'll go up in a few days, but wouldn't it be better to stop-loss and wait for it to stabilize before buying back in?"

For example: Stock A is priced at per share today. Analysis suggests it's likely to rise to the next support level of . You buy in, and the next day a sudden crash occurs, causing a sharp drop. It stabilizes at and rebounds to . If you had placed a stop-loss order at .5, you would have lost 举个例子：A股票今天20刀/股，分析出来大概率涨到下一个平台23刀，买入后第二天发生了核战争，突然暴跌，在18刀企稳反弹到了22刀。这时候如果事先放了止损位19.5，那么你损失0.5/刀，如果他跌到18.5左右你发现企稳了，再买入。那么你最终拿到手的是-(20-19.5)+(22-18.5) = 3刀/股。比起不做止损的2刀/股还赚了，而且避免了心理压力，不是所有都是核战争引起的跌，很多时候涨不回来。（别问说怎么看企稳，怎么分析，如果这些不是很熟悉的话，更需要stop loss了）.5 per share. If it had stabilized around .5, and you bought in then, you would have ultimately received -(20-19.5) + (22-18.5) = per share. This is better than the per share loss without a stop-loss, and you avoided psychological pressure. Not all crashes are caused by sudden price drops; many times, the price doesn't recover. (Don't ask how to identify stabilization or how to analyze it; if you're not familiar with these concepts, you especially need stop-loss orders.)

Therefore I believe,To reduce risk, a stop-loss order should be set for each trade. The percentage should be set according to your own circumstances.

Okay, enough rambling, let's introduce Robinhood's "weapons".

When buying or selling, in the "shares" field, you'll see an "order types" option in the upper right corner, which includes: market, limit, stop loss, and stop limit. This can be confusing because both buying and selling use these options, but their functions are completely different. Let's explain them separately:

When buying:

• Market Order: This is the default option, which can be understood as buying at the market price. It's important to note that this transaction involves buying a specific quantity from someone else at a specific price. Therefore, the current price you see is not the final price at which the transaction is successfully completed. You won't notice this when buying a few hundred or a few thousand shares, but you'll find the transaction price fluctuates significantly when buying tens of thousands. This is because it's an average transaction price, not a single transaction. You might be trading different quantities at different prices multiple times, eventually accumulating into a tens of thousands order. Robinhood's official rule is a 5% fluctuation, meaning that if you see it at 0 now, it's normal for it to eventually execute at 5.
• Limit Order: This corresponds to market order. You can set the maximum purchase price. For example, if the current stock price is 0, you can set it to 1. If the price is higher than this, the stock will not be purchased (most people don't need this).This section is used for buying on pullbacks.The current price is 0. You can set it to , and it will automatically buy when it reaches . Note that Robinhood only allows setting it for the same day or permanently.
• Stop Loss: This is a bit difficult to understand when buying, and its practical use isn't very extensive. It's used for adding to a position. For example, if the current price is , and you set a Stop Loss at (note that this is a stop loss on purchase), it will execute a market order when the price reaches .
• Stop Limit Order: This section combines stop loss and limit order operations. You need to input two numbers, one for stop loss and one for limit order.

Useful when selling:

• Market Order: The default option, it works the same as buy, it's a normal sell until it's sold out, the price will change. If you don't understand, you can read about the market order for buy.
• Limit Order: This is a profit-taking strategy. For example, if the current price is , setting a limit of will trigger a sell order and take profit when the price reaches . Note: If the stock touches and then immediately retraces, it may not be possible to sell all shares. Therefore, when calculating the profit-taking point, it is recommended to set it slightly lower by 0.1%-0.2%.
• Stop Loss Order: This is self-explanatory... Set a stop-loss level (very important), and then automatically sell when the stop-loss is reached.
• Stop Limit Order: This is rarely used. You need to set a stop loss and then add a limit order option. Simply put, if the current price is , you set a stop loss at , and then a limit order at .9. When the price reaches , it will trigger a sell, but if the price drops below .9 before the sell is completed, it will not sell (this is ridiculous, otherwise the stop loss would be meaningless).

Okay, that's all. The main useful features are all in the "sell" section (stop-loss and take-profit), since you only make money by selling. I just discovered these features myself, and I'll update this if I find anything new during testing.

Here's an invitation code for opening a Robinhood account:http://share.robinhood.com/jingt