The price of some stocks can rise and drop suddenly . In these fast markets where many investors want to trade at the same time and prices change so quickly , delays can develop constantly . Reports of prices lag behind actual prices and confirmations slow down . In these markets , investors can face unexpected losses very quickly . Investors dealing with online investing , who are used to instantly access their accounts and near momentary completions of their trades , are very much in danger of losses and need to understand how they can protect themselves in volatile markets. You can limit your losses in fast - moving markets by knowing how trading changes during fast markets and by taking additional steps against the typical problems investors face in these markets .
With just a click of the mouse , you can buy and sell stocks from more than 100 online brokers offering executions as low as $ 5 per transaction . Although online investing saves investors time and money , it does not take the work out of making investing decisions . With online investing, you may also be able to make a trade in a second , but making wise investment decisions takes considerable time . Before you trade , know why you are buying or selling , and the risk of your investments . To avoid buying or selling a stock at a price higher or lower than you wanted , you may want to place a limit order rather than a so-called market order . The limit order lets you buy or sell a security at a specific price . A buy limit order can only be executed at the limit price or lower , and a sell limit order can only be executed at the limit price or higher . When you place a market order , you can ' t control the price at which your order will be filled .
For example , if you want to buy the stock of an Initial Public Offering that was originally offered at $ 9 , and don ' t wish to pay more than $ 20 for the stock , you can place a limit order to buy the stock at any price up to $ 20 . By entering a limit order instead of a market order , you will not buy the stock at $ 90 and then suffer immediate losses as the stock drops later in the day or the weeks ahead . Your limit order may never be completed because the market price may quickly exceed your limit before your order can be filled . However, by using a limit order you also protect yourself from buying the stock at a price which is too high.
Investors may find that some technological problems slow or prevent their orders from reaching the online firm . For example , problems can occur when :
- an investor ' s modem , computer , or Internet Service Provider is slow or faulty ;
- a broker - dealer has inadequate hardware or its Internet Service Provider is slow or delayed ; or
- traffic on the Internet is heavy , slowing down overall usage .