buying stocks (market order vs limit order)

[ski]

I am not sure which one to use. It seems everytime I do a market order it is like I get ripped off.

If I am buying insignificant amounts of these stocks (<$15K per stock), want to hold them long term, and am not day trading what do you suggest?

If I place a limit order when should I cancel it? Where would u place the limit in relation to the ticker/bid/ask?

Thx,
Ski

[jws43yale]

I always use a market order for heavily traded stocks that I plan on holding onto. The 2 cents difference is not worth is for me. But when I am try to make a short term momentum play, trade small cap stocks without much volume, etc. I use a limit order. I usually make my limit order good for the day since I never hold for less than a week with most plays.

[Evan]

What kind of order to use depends on the price you want to pay for it. Assuming there's reasonable volume relative to your purchase and you like the current ask price there's no reason not to use a market order. If you are making a large buy relative to the volume, such that your purchase would create enough demand to shift the price higher than you'd be willing to pay, use a limit order. Same if you want to pay less than the current market price, obviously.

Where to place a limit order relative to the current market price is a pointless question because it is totally dependent on what you want to pay.

[Tater10]

If you are happy with the bid/ask, just bid right into the offer for the size you want. If the size isn't there, cancel/replace for the remaining shares at a higher price (if you want to pay up.)

[Gigi]

[ QUOTE ]
Where would u place the limit in relation to the ticker/bid/ask?

[/ QUOTE ]

The ticker refers to the last sale price. If you like that price, place a limit order at that amount. If you want to try to get a better deal, try placing a limit order half way between the bid and the ask and hope someone bites. As stated, with high volume there should be a tight spread (the difference between the bid and ask) and the difference between a limit order and market order isn't much.

[Evan]

[ QUOTE ]

The ticker refers to the last sale price. If you like that price, place a limit order at that amount. If you want to try to get a better deal, try placing a limit order half way between the bid and the ask and hope someone bites.

[/ QUOTE ]
Almost 100% of the time half way between the bid and the ask is going to be pretty damn close to the ticker, if not exactly the ticker.

[kimchi]

[ QUOTE ]
I am not sure which one to use. It seems everytime I do a market order it is like I get ripped off.

[/ QUOTE ]

A market allows you to control your timing at the expense of over-paying.
A limit order allows you to control your price at the expense of not getting filled.
You have to take your pick.

As other posters have said, a lot depends on the type of stock or market in which you are participating when deciding which order to place.

I would suggest trying a different broker. In the UK, discount brokers (ie $15 per trade) don't tend to get you good fills. Other more established/mainstream brokers ($30/trade) use more market makers and can often get you a better price.

Maybe this is a similar situation in The US (albeit obviously cheaper)

Maybe your positions are large enough to warrant paying for better service and fills.

[thehun69]

If you are holding these things for the long term, then just use a market order and move on. Yes, you may get better pricing with a limit order, but really if the bid ask spread is tight (one to two cents, which they usually are on the heavy traded ones) then even a market order is fine and won't be that much of a rip off. Because you are investeing for the long haul there is no need to be a nit for pennies. I've worked at a brokerage and watched a client be a nit all the way up as the stock was climbing. If the Bid Ask was 29.35-29.40 he would put the order in for 29.25, and managed to do that all the way up to 40 bucks never buying the stock. I told him, if you think the stock will move up, why be a nit and just place the damn order. So same advice applies. Who cares if you lose out on pennies, if you think that the stock will move considerably higher.

Now if you were daytrading, then every single penny counts because that's the type of moves they are looking for, then we are in the realm of limit orders.

Place a market order, buy your stock and hold it to match your investing objectives.

THE HUN.

[Ray Zee]

on a limit order you may only get it filled if the stock is looking weak. so a market order is the way to go.

[Shoe]

I would agree, for a smaller amount of money, and if you are holding for the long-term, don't be a nit over pennies.

That being said, in the limited amount of trades I have done, all of my limit orders have been filled almost instantly by trying to buy at either the ticker price or just below, or trying to sell at the ticker price or just above, but still staying at or between the bid and ask prices.

If you can get level 2 quotes I think that would be huge as to knowing how successful your limit order might be, but I have never seen them with live data so I can't be sure.