Author Topic: Market Order vs Limit Order  (Read 4912 times)

nach0s

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Market Order vs Limit Order
« on: January 04, 2017, 09:53:38 PM »
Hi all, I'm looking to sell my ESPP stocks (through Fidelity). Should I do a market order or limit order? Any advice for me? This will be my first time selling. Thanks in advance!

geekette

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Re: Market Order vs Limit Order
« Reply #1 on: January 04, 2017, 10:22:54 PM »
Market order means you get whatever the going rate as soon as possible. For a limit order, you set a price and it sells once there's a buyer at that price, as long as its before your order times out (I think it's usually 60 days).

I generally do a limit order and try to push it up a bit. I've had friends who put in market orders who were disappointed/surprised by a lower than expected price.

There's no magic price!

kayvent

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Re: Market Order vs Limit Order
« Reply #2 on: January 04, 2017, 10:35:25 PM »
There are different scenarios that can cause grief in either method. Thankfully for you the grief is less in the selling scenario than buying.

In short periods of time, especially when markets open in the morning, there can be bizarre market fluctuations. If possible, whether limit or market, make sure it doesn't execute in the morning. If you can wait for the sale and want a guaranteed price, a limit order makes sure you don't lose a few percentage points if a random drop occurs. If you don't care, you just want the stuff sold and need to use the money immediately, a market order should be fine.

Your broker is legally required to get the best price available regardless the order type market. So these oddities don't usually matter much. If you are finding this choice difficult: flip a coin. You are likely to be right over 50% of the time.
« Last Edit: January 04, 2017, 10:43:31 PM by kayvent »

nach0s

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Re: Market Order vs Limit Order
« Reply #3 on: January 05, 2017, 11:30:24 AM »
I generally do a limit order and try to push it up a bit. I've had friends who put in market orders who were disappointed/surprised by a lower than expected price.

How up to you push it by? Let's say the bid is $62.48. Ask is $62.47

geekette

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Re: Market Order vs Limit Order
« Reply #4 on: January 05, 2017, 11:36:31 AM »
There's no magic price! Your guess is as good as mine, but I do tend to stay below whole numbers.

nach0s

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Re: Market Order vs Limit Order
« Reply #5 on: January 05, 2017, 12:07:11 PM »
Thanks for the replies! Should I do Good Till Cancelled so it doesn't expire at the end of the day if not filled?

Should I do 'All or None' to avoid being charged commission fee more than once? I'm looking to sell 100 shares

ImCheap

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Re: Market Order vs Limit Order
« Reply #6 on: January 05, 2017, 12:19:37 PM »
Thanks for the replies! Should I do Good Till Cancelled so it doesn't expire at the end of the day if not filled?

Should I do 'All or None' to avoid being charged commission fee more than once? I'm looking to sell 100 shares

If it does not get completely filled do they charge additional fee for remainder trades?

nach0s

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Re: Market Order vs Limit Order
« Reply #7 on: January 05, 2017, 12:25:28 PM »
Fidelity told me they charge commission per transaction. If your order gets partially filled, you'll get charged a second commission fee since it's another transaction.

ImCheap

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Re: Market Order vs Limit Order
« Reply #8 on: January 05, 2017, 12:27:51 PM »
My simple take on Limit/Market orders, if its a very heavily traded security (like VTI) where the bid/ask is like a penny it most likely wont make a difference if you use a Market or Limit Order, I 'm not a fan of Market Orders hour before open/close however.

With the above said I only use Limit Orders, feel its a good habit. I will look trade a few hours into the day with a penny so above the current buy and generally it sells. Fair warning I have seen it run away a few times!

ImCheap

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Re: Market Order vs Limit Order
« Reply #9 on: January 05, 2017, 12:37:14 PM »
Fidelity told me they charge commission per transaction. If your order gets partially filled, you'll get charged a second commission fee since it's another transaction.

That's kind of crappy!

I did not look up what you are selling but my guess is 100 shares would not be a huge deal and would go in one lot. If you are just looking to get out of the position/cleaning up not going to be big deal if it cost a couple of trades. Admit I don't know what they charge per trade.

geekette

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Re: Market Order vs Limit Order
« Reply #10 on: January 05, 2017, 12:56:22 PM »
I'm sure commission rates depend on the account.  Admittedly, I've only traded ESPP and RSU shares, and my DH's company may have negotiated some very good rates.  Even if they went in multiple lots, the fees were very low, like $30 for 750 shares.

Have they told you the rate structure for your ESPP? It may be different than the generic rates.

Quidnon?

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Re: Market Order vs Limit Order
« Reply #11 on: January 05, 2017, 01:01:03 PM »
Fidelity told me they charge commission per transaction. If your order gets partially filled, you'll get charged a second commission fee since it's another transaction.

I use Fidelity, and there is an "all or none" option with limit orders of at least 100 shares at a time, that will prevent a partial sale triggering multiple commissions.  It's a drop down menu near the bottom of the order menu, left side.  I use it religiously, and avoid buying or selling in blocks less than 100 shares at a time.

marty998

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Re: Market Order vs Limit Order
« Reply #12 on: January 05, 2017, 01:37:19 PM »
Never place an at market order. High Frequency Traders and Algorithms will front-run you and steal a pip or two in the blink of an eye.

In Australia, there are institutional traders who have paid for the privilege of having their computers being located next to the ASX servers, linked by a 64 metre fibre optic cable.

http://www.businessinsider.com.au/insider-the-asxs-super-secure-liquidity-centre-where-the-flash-traders-2015-9

At least if you place a limit order, you will get the price you want assuming the market moves in your direction.

kayvent

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Re: Market Order vs Limit Order
« Reply #13 on: January 05, 2017, 03:24:51 PM »
Never place an at market order. High Frequency Traders and Algorithms will front-run you and steal a pip or two in the blink of an eye.

What you are describing should be an outdated phenomenon. Brokers became aware of HFT causing this artifact and have invented ways to reduce this. As brokers were the ones negatively affected by this, it was in their interests to address this.
« Last Edit: January 05, 2017, 03:27:26 PM by kayvent »

talltexan

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Re: Market Order vs Limit Order
« Reply #14 on: January 06, 2017, 08:10:02 AM »
One of my co-workers here said he always buys on limit, but he always sells at market.

the nice thing about a market order sell is that you have the money right then to re-deploy in a new "buy" order, which can be on limit. Make the money when you buy!

Quidnon?

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Re: Market Order vs Limit Order
« Reply #15 on: January 06, 2017, 12:27:35 PM »
One of my co-workers here said he always buys on limit, but he always sells at market.

the nice thing about a market order sell is that you have the money right then to re-deploy in a new "buy" order, which can be on limit. Make the money when you buy!

No you don't.  What you have is a pending credit; but I know from experience that if you do this from within an ira (which isn't legally allowed to have leverage or credit) and your buy limit order executes too fast, and that debit somehow settles before your earlier pending credit settles, there will be consequences.  My ability to trade at will was restricted for 90 days, I think, when this occurred.  I think that it was an automated response to the event of buying without funds available, and that  the possibility of multiple orders settling out of order was never considered.  Hell, I didn't even think it possible till it happened; even the customer service rep I called had never heard of that happening, but she didn't have the power to revoke the punishment.  It's probably unlikely to ever matter, unless you trade often and without any cash reserve inside that account, but if you do this inside of a retirement account be aware that it can happen.

kayvent

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Re: Market Order vs Limit Order
« Reply #16 on: January 06, 2017, 05:11:12 PM »
One of my co-workers here said he always buys on limit, but he always sells at market.

the nice thing about a market order sell is that you have the money right then to re-deploy in a new "buy" order, which can be on limit. Make the money when you buy!

No you don't.  What you have is a pending credit; but I know from experience that if you do this from within an ira (which isn't legally allowed to have leverage or credit) and your buy limit order executes too fast, and that debit somehow settles before your earlier pending credit settles, there will be consequences.  My ability to trade at will was restricted for 90 days, I think, when this occurred.  I think that it was an automated response to the event of buying without funds available, and that  the possibility of multiple orders settling out of order was never considered.  Hell, I didn't even think it possible till it happened; even the customer service rep I called had never heard of that happening, but she didn't have the power to revoke the punishment.  It's probably unlikely to ever matter, unless you trade often and without any cash reserve inside that account, but if you do this inside of a retirement account be aware that it can happen.

For some equities and trades, it can take three days for ownership/payment to settle :) This modern technology where a trade appears to settle instantly obscure this.

pumpkinlantern

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Re: Market Order vs Limit Order
« Reply #17 on: January 07, 2017, 06:50:52 PM »
Always buy with limit orders.  Always.  Even if you just put in the market price.  You never know if there will be a weird blip in the system, especially for smaller volume stocks.  Unlikely, but possible.

marty998

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Re: Market Order vs Limit Order
« Reply #18 on: January 07, 2017, 07:36:45 PM »
One of my co-workers here said he always buys on limit, but he always sells at market.

the nice thing about a market order sell is that you have the money right then to re-deploy in a new "buy" order, which can be on limit. Make the money when you buy!

No you don't.  What you have is a pending credit; but I know from experience that if you do this from within an ira (which isn't legally allowed to have leverage or credit) and your buy limit order executes too fast, and that debit somehow settles before your earlier pending credit settles, there will be consequences.  My ability to trade at will was restricted for 90 days, I think, when this occurred.  I think that it was an automated response to the event of buying without funds available, and that  the possibility of multiple orders settling out of order was never considered.  Hell, I didn't even think it possible till it happened; even the customer service rep I called had never heard of that happening, but she didn't have the power to revoke the punishment.  It's probably unlikely to ever matter, unless you trade often and without any cash reserve inside that account, but if you do this inside of a retirement account be aware that it can happen.

For some equities and trades, it can take three days for ownership/payment to settle :) This modern technology where a trade appears to settle instantly obscure this.

It is predicted that Blockchain technology will go most of the way towards permitting instant settlement, rather than the current clearing house systems currently in place.

Mighty-Dollar

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Re: Market Order vs Limit Order
« Reply #19 on: January 08, 2017, 10:09:25 PM »
Hi all, I'm looking to sell my ESPP stocks (through Fidelity). Should I do a market order or limit order? Any advice for me? This will be my first time selling. Thanks in advance!
Back in August of 2015 when we had wild swings, some people who placed market orders got slammed, losing 10% off their buy or sell order. For that reason I say stick with limit orders a little bit below market. Also don't place an order, sleep on it overnight, then check on it an hour or two into trading. Place your order DURING trading and just see if it goes through.

markbike528CBX

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Re: Market Order vs Limit Order
« Reply #20 on: January 09, 2017, 05:36:08 AM »
I sell put orders to buy.   That way , I get paid to buy.   
Since I've sold very little I haven't sold call options to sell yet, but that's my plan. 
If you sell the option, that sets a limit order that can last for up to a year.

Handy for me as I don't want to have to check the order status.

options are above the scope of the present discussion, and Not for newbies.

sanderh

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Re: Market Order vs Limit Order
« Reply #21 on: August 26, 2018, 07:23:52 PM »
Should I do Good Till Cancelled so it doesn't expire at the end of the day if not filled?
Putting in a limit order is like giving an option away for free. For example, a limit buy is giving the market a put option at the specified price. The longer the expiry date on the limit order, the more valuable the option you are giving.