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Say something you are interested in is going for $100/share. But you don't feel it's worth more than $90, so you place a limit order to buy for $90, good until cancelled.
What's the consensus, pros/cons, on using limit orders in this fashion? Thanks.
I always use limit orders- have only used market orders if I just want in the position no matter what price. What your describing is the exact reason to use limit orders- you have done your dd & realize the co. is not worth more than $90 share. One other lesson I have learned throughout the years is I do not "chase" a stock. I have a stock right now in which my limit order was only .05 away but I'm betting I will pick up the shares next week.
Used only limit orders on my swing trades as well with triple leveraged products.
Location: Was Midvalley Oregon; Now Eastside Seattle area
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OP, not a good idea for any thing more than a couple of weeks. Even then, you would be taking Risk with either a market collapse or company's stddiv One of my favorite stocks had market correction last week that would have blown through any of my normal buy 100@$n, gtc.
OP, not a good idea for any thing more than a couple of weeks. Even then, you would be taking Risk with either a market collapse or company's stddiv One of my favorite stocks had market correction last week that would have blown through any of my normal buy 100@$n, gtc.
I have had both good and bad luck with limit orders. Have had it save me from buying when volatility hurts but also missed out on some good deals when demand started at the open. If possible trade after you see the trend that day.
Say something you are interested in is going for $100/share. But you don't feel it's worth more than $90, so you place a limit order to buy for $90, good until cancelled.
For your above example, rather than placing a GTC order at $90, I would sell a put option at $90. This way, I'd get paid for waiting and if nothing happened and the put expired, I might sell another one closer to the actual stock price, and at a higher premium.
Location: Was Midvalley Oregon; Now Eastside Seattle area
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Quote:
Originally Posted by oneslip
Sounds like your dd was off.....
Not to worry, my due diligence said to be essentially out of market 2017. Holding 85% cash in Discretionary. I was not holding this stock prior to Friday's active buys.
The buy was too good, so I bought using limit orders a couple of 10s basis points near market intraday lows using limit GTC+extended. Any outstanding buy/sell orders I review for next day. I may buy more tomorrow using a GTC 100-200 basis below Friday's close. I won't hold this stock too long.
YMMV
Last edited by leastprime; 04-30-2017 at 05:48 PM..
Say something you are interested in is going for $100/share. But you don't feel it's worth more than $90, so you place a limit order to buy for $90, good until cancelled.
What's the consensus, pros/cons, on using limit orders in this fashion? Thanks.
Limit orders take the emotion out of the equation. You decide when a stock is a good value for you, based on your criteria, and what you're willing to pay for it and that's a decision not based on spur of the moment market frenzy. It's a good tool as long as you see it for what it is: a tool. It's not a solution for every situation, but when used for its specific purpose, it can be very helpful.
Say something you are interested in is going for $100/share. Butt
you don't feel it's worth more than $90, so you place a limit order to buy for $90, good until cancelled.
What's the consensus, pros/cons, on using limit orders in this fashion? Thanks.
Its a great strategy that allows you to obtain wish-list prices on stocks.
If you miss a buy so what? The money is more than likely made in the buying and not-so-much getting some great price.
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