How do limit orders work, and are they better than using market orders?

Answer 1

One other thing to be careful of is entering in a market order before the market is open. You can get ripped off doing this. If you are entering an order before the market opens, always use a limit order. If the market is open and the stock you want to trade is fairly active, a market order is OK.

Answer 2

As a former stock broker, the basic rule of thumb was to buy with a market order (so as not to miss the market with a limit order and perhaps never have the shares execute) and to sell with a limit order (to set your target price and have a goal you want to achieve... you can be more patient on this end, since you already own the shares and simply are waiting for your price). I personally do market orders for both... when I'm ready to sell, I'm ready to sell.

Answer 3

First answer is correct....you might understand that a market order is made at price when it's executed by the broker. So, your price can vary from the amount that you set your order...it's a market price. You can set a range/limit order with your broker so that you control your price as a range. He or she will execute order to purchase the stock you want within the range you give him, but you won't be stuck with a price you never intended. It's kinda' like saying I want to buy 100 share of a stock now, based upon how it's trading on a ticker and not knowing the exact price, v. leaving an order for 100 shares of stock to be purchased as soon as possible between $X and $Y, then your broker buys it when possible. Both orders can be made to expire by a certain date......if that helps a little

Answer 4

A limit order is an order to buy or sell stock at a set price - set by the person that enters the order (you). The problems using one vs. a market order is that the stock may trade up or down to withing a penny of you order, and you'll never get exectuted, perhaps causing you to miss an opportunity by trying to save a penny.
Of course, the chance of a poor execution on the part of your broker is greatly diminished. If the stock is illiquid or trades with a wide spread you're generally better off using a limit. I wouldn't waste my time if you're trying to buy a stock that trades in a very narrow range, with a very narrow spread and is highly liquid. LU for example.

Answer 5

I use limit orders and have had very good success especially in buying with them. Limit order basically means you set the price. Market order is that the market dictates the price. One of my better limit buys was ADRE I set it at 32.50 before the market opened on Monday (after the so called nuke test from N. Korea) and the order was filled at an even lower rate of 32.41 now it's at 32.96.

Its notalways that successful but if you set the price pretty close to what the market dictates you'll peobably get it at that price.