NFLX is a very fast moving stock. Buy at Market and Buy with a Limit equal to the Ask are not the same. Which to choose depends on your trading style. For me, I would only use a Limit order to Buy because I want to specify the maximum price I'll pay not let someone else decide the maximum price I'll pay. If I want to be very aggressive, I'd make my Limit equal to or maybe even more than the Ask. If I don't want to be aggressive I'd set my limit equal to the Bid. If I want to be in between I'd choose limit price between the Bid and Ask.
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Market Order or Limit Order
- Thread starter traderharley
- Start date
NFLX is a very fast moving stock. Buy at Market and Buy with a Limit equal to the Ask are not the same. Which to choose depends on your trading style. For me, I would only use a Limit order to Buy because I want to specify the maximum price I'll pay not let someone else decide the maximum price I'll pay. If I want to be very aggressive, I'd make my Limit equal to or maybe even more than the Ask. If I don't want to be aggressive I'd set my limit equal to the Bid. If I want to be in between I'd choose limit price between the Bid and Ask.
Don't EVER use market orders. Use limit only - if you want to get into a stock just "pay through" on your price.
Example:
Stock ABC, Bid = $10.00, Ask = $10.01
if you want to buy, send a limit order for $10.26
if you want to sell, send a limit order for $9.75
You will be given an instant fill plus price improvement.
Example:
Stock ABC, Bid = $10.00, Ask = $10.01
if you want to buy, send a limit order for $10.26
if you want to sell, send a limit order for $9.75
You will be given an instant fill plus price improvement.
Quote from VoodooMMI:
NFLX is a very fast moving stock. Buy at Market and Buy with a Limit equal to the Ask are not the same. Which to choose depends on your trading style. For me, I would only use a Limit order to Buy because I want to specify the maximum price I'll pay not let someone else decide the maximum price I'll pay. If I want to be very aggressive, I'd make my Limit equal to or maybe even more than the Ask. If I don't want to be aggressive I'd set my limit equal to the Bid. If I want to be in between I'd choose limit price between the Bid and Ask.
Thank you VoodooMMI for detail limit order application. If you use Hotkey to enter order, one more question for you. Since you have 3 options for limit orders - Limit Bid, Limit Ask, and Limit in between Bid & Ask, would you normally enter Limit Bid first and then adjust the price by the situation, or you will enter Limit Ask or limit in between according to your judgment at that moment? Thanks in advance.
Quote from WinstonTJ:
Don't EVER use market orders. Use limit only - if you want to get into a stock just "pay through" on your price.
Example:
Stock ABC, Bid = $10.00, Ask = $10.01
if you want to buy, send a limit order for $10.26
if you want to sell, send a limit order for $9.75
You will be given an instant fill plus price improvement.
Thank you Winston and you have a very interesting way to place limit order. If you send in a limit order for $10.26, and current ask=$10.01, can broker fill your order at $10.25? which is still lower than you limit order price? This will be like a market order, but limit your risk. Or the broker has to fill your order at the ask price or better?
Quote from traderharley:
Thank you Winston and you have a very interesting way to place limit order. If you send in a limit order for $10.26, and current ask=$10.01, can broker fill your order at $10.25? which is still lower than you limit order price? This will be like a market order, but limit your risk. Or the broker has to fill your order at the ask price or better?
When I place a limit order with my broker I get my price or better. For multiple option spreads I have seen partial fills with different leg prices but the credit I required. I have also seen multiple fills with different credits at my limit or better. Partial fills can also be from different exchanges.
A good broker should be able to do all this behind the scenes without effort on your part.
Quote from traderharley:
Thank you VoodooMMI for detail limit order application. If you use Hotkey to enter order, one more question for you. Since you have 3 options for limit orders - Limit Bid, Limit Ask, and Limit in between Bid & Ask, would you normally enter Limit Bid first and then adjust the price by the situation, or you will enter Limit Ask or limit in between according to your judgment at that moment? Thanks in advance.
Experience will be your best guide. Use your best judgment. You may want to use any one of those 3 choices. Your trading strategy, style, particular stock and many other things may influence which one you want to use. Experiment and you'll find some personal generalized rules that work well for you.
You should get price improvement meaning you should get no worse than the NBBO at the time you placed your order whereas when you place a market order your broker is allowed to hold the order for a period of time (i really don't know the time frame) before they execute which allows some HFT shops to pull orders, fill you higher/lower then replace their liquidity.Quote from traderharley:
Thank you Winston and you have a very interesting way to place limit order. If you send in a limit order for $10.26, and current ask=$10.01, can broker fill your order at $10.25? which is still lower than you limit order price? This will be like a market order, but limit your risk. Or the broker has to fill your order at the ask price or better?
Obviously I don't know your strategy and you should be careful if you are trying to trade news/events trades because liquidity and prices can move quickly and if you "pay through" a bunch you can get burned... Just be mindful of the market you are trading in.
Quote from WinstonTJ:
You should get price improvement meaning you should get no worse than the NBBO at the time you placed your order whereas when you place a market order your broker is allowed to hold the order for a period of time (i really don't know the time frame) before they execute which allows some HFT shops to pull orders, fill you higher/lower then replace their liquidity.
Obviously I don't know your strategy and you should be careful if you are trying to trade news/events trades because liquidity and prices can move quickly and if you "pay through" a bunch you can get burned... Just be mindful of the market you are trading in.
Thanks a lot WinstonTJ.