for buying on limit orders, should you choose the price close to bid price or ask price or above/below them ?

Question

please exdplain

Answer 1

It depends on a couple of factors. 1. how bad do you want the stock. 2. what the market is doing at the time and what the stock is doing.

Normally what I do if I really want the stock is put the limit price in at the ask price. That will protect you against getting the shaft on a market order. Of course you may not get the stock if the price moves up dramatically.

If the market is sloppy--dropping in price-- I normally put in a limit about .25 below the bid. I do not really care whether I buy the stock or not. It may be lower tomarrow.

There are cases where one should put in a buy at market. The company just came out with their earnings and they blew the market away. The company just raised their dividend 15%. Actually a dividend raise is a darn good reason to buy a stock. Normally after a raise in the dividend the stock will rise in price for the next several days as everyone eventually finds out about it. These are the conservative investor types that do not follow the market minute by minute. They may read about it in their paper for example and decide to buy some more.

Answer 2

If you are patient its a good idea to buy below bid & ask. Stock price yo yo's all day, might as well set limit order a little under the average trading range. & if your really patient, TDAmer lets you put those in up to 30 days.

However for low volume stocks always use limit, you can get burned if you use a market order.

gl

Answer 3

Here's the simple skinny on buy orders..............
Most ppl buy on market orders.With a market order buy you are doing just that:buying at the current market price, ergo a Lil slippage.

When buying on a limit order you are saying you want this stock sometime in the near future at "X" price. X is your price and you are hoping the market will rise or fall,(depending if you are going long, or short) to your price.

Some brokerages call the above market-day orders& limit-day orders,as they are only good to fill on the day you make the order to buy.

There is also a limit "good till cancelled" order, which simply means your order to buy a stock at "X" (your) price will execute only if the stock hits your "X" price at some time in the next 30 days. If a week goes by ,... and your stock goes nowhere near your "X" price ;you may choose to cancel the order. (These GTC orders are a good way to go if you can only get partial fills or care to slowly accumulate a position as well.)

Personally,I use limit day orders as I want to know exactly when my trade executes. If its hot, and i want to be in right now, I'll use a market day order.
Try to tailor your order to your buy,.... you want to get as close to your execution target as possible.
I'm NOT going to coach anyone here as to how they should execute their trade or investment,there are just too many variables to cover.

GOOD LUCK

Answer 4

You choose the exact price you are willing to pay and just wait.

Answer 5

PRICE ABOVE TO MAKE SURE YOU GET PRODUCT.
YOU PAY PRODUCT COST WHICH WILL OR SHOUD BE BELOW YOUR BID PRICE.

BID BELOW/BID PRICE AND YOU MAY LOSE OUT...