What is the best way to buy stock, Market order or Limit Order ?

Question

I plan to buy stock online, but want to know which way is the best?
Market order or Limit Order ? What are the difference?

Thank !

Answer 1

I use limit orders at Scottrade almost exclusively. At Scottrade at least, they are the same price as market orders, $7.

The only time I ever use a market order is when the stock price is falling too fast. For example, if I bought a stock and it was falling and I needed to sell it fast, a limit order might never execute.

What I usually do to buy a stock is check the price range it has been at lately, and place a limit order at about 5% below the lowest price.

What I usually do to sell a stock is check the price range it has been at lately, and place a limit order at about 5% above the highest price.

Answer 2

Definitely a limit order. If you set a limit order, the broker will only execute your buy order up to a certain price that you specified, otherwise if you set a market order, they don't really care which price they execute your order at. This means that you might be paying an additional 1-2% more with a market order. You set market orders if you don't think the price will fluctuate that much during the day and if you're planning on investing long term. I highly recommend limit orders regardless because you can save a few dollars here and there.

Answer 3

Market order is whatever the price is at the time your broker gets on the mound.

Limit order: you put restrictions on how high to bid or sell for a stock.

Limit orders cost more but can keep you from paying too much. A limit order may not get filled because the stock may not fit the limits you place on it.

Market orders should almost always get filled but you can easily pay a lot more than you anticipated because or market fluctuation.

Answer 4

JIm Cramer (CNBC) always says to use Limit Orders with an expiration at the end of the day. Prevents nasty surprises. And, if the order doesn't get filled, you just get to keep your cash...not a bad consolation prize versus the broker making a fat commission off selling you something at any price...which is what you tell her to do if you place a market order. How often do you go into a restaurant and say, "I want a hamburger at any price you'll sell it to me?" It may be the best burger in town, but is it really worth an extra $5 because you are willing to pay more?

BW

Answer 5

Limit order is the most better way to go. It will take longer for your trade to complete, possibly. But you know what the price will be. With a market order, you basically get whatever price someone feels like giving you. Usually this is not to your benefit.

Answer 6

if stock is going up market order is better. if it is coming down it is better buy on limit order.( for buying)

Limit orders Orders that have thresholds, a useful safety measure. For example, you could place a limit order to buy 100 shares of Infosys for Rs 8,000 or better (or less). With that order, you could buy the Infosys stock for Rs 8,000 or for less than Rs 8,000. If the price is over Rs 8,000, you will not have your order filled.

Market order An order by an investor to buy a share regardless of price on that day

Answer 7

Limit Order. You can buy shares at the price you want to pay.

Market orders you pay whatever price it is at that moment.

Answer 8

Everybody here seems to like limit orders. I do too, but I also like market orders. I've used both with success so far.

For buying, I typically use a market order if I expect the stock to move up sooner rather than later. If the price on a particular stock seems to already be very low compared to its own trading history or that of other stocks in its business sector by way of p/e ration or some other statistical means of my choosing at the time, I'd rather go with a market order. However, if I think the stock is currently overvalued, than I'd rather go with a limit order and wait for a better price.

For selling, I use a wide variety of strategies. I particularly like trailing stop orders since they limit my potential loss and can lock in gains as they accumulate.

I bought Airtran (AAI) at a limit price of $10 waiting four or five days while it was trading at about $11.00. I subsequently put a trailing stop sell order on it for $2.00 lower than the highest bid price, and wound up selling at about $12.00 (I knew I should have sold it at closer to 13 as a market order. Live and learn, though.)

Others have already explained the difference between market and limit, but as I'm talking about a trailing stop order here, I should probably explain that. :-)

You buy a stock. You want to protect your profits (if any) and limit your potential losses at the same time, but you are willing to allow for market fluctuations in the stock price. You can set what is called a trailing stop price on the stock. What this does is send your order to the market at the market rate if the current price of the stock you own drops either a certain dollar value or a certain percentage below its highest bid rate from the time you place the order. If the price of the stock never reaches that point, you still own it. At the same time, if the bid rate climbs, so will your trailing stop price, so that when you do sell, you will sell at the higher price.

Example: You buy stock Company XYZ at $10.00 at market rate. You immediately place a trailing stop sell order for $1.00. (If you are trading with a cash account and not a margin account, you can't actually do that without waiting for 3 market days, so this example is for illustrative purposes only.) Therefore, if the bid price for XYZ Company immediately drops below $9.00, you would sell your shares at about $9.00 (whatever the market rate is at the time your trade comes up for execution). However, if instead, the price climbs reasonably steadily for a while, say, up to $14.00 without losing ground by $1.00 or more during that time, you would still own your shares of XYZ company, but now the trailing stop price would be at $13.00 (one dollar below its highest bid price). If, then, the stock should go down to $12.00, you would sell at about $13.00, and have preserved most of your profit from the climb upward in the first place, and you would be protected in teh event the stock would continue to decline because you don't own it anymore.

Answer 9

Every time I was impatient to get a stock N-O-O-OW I always ended up paying more than I had to. Stocks fluctuate within a certain range during the day, week, or month. If you lowball them by specifying a price in the bottom end of the trading range, you end up getting it for significantly lower than if you'd bought at the Market. Multiply that by the number of shares you're buying (100 or more) and we're talking about real money. You may pay a little more in brokerage fees, but it's more than made up for in the lower price overall.