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Question for the experts, for example if I hold a stock say, JCP, currently priced at $9.
If I put in a order to sell limit order of $8 until cancel, meaning sell when it reaches $8 or below. Let's say the market closes at $8.5, then the company announced earnings at 4:30 pm, and it's really bad, the price dropped to $6.
Will my limit order execute at $8.5 or $6? or anywhere in between depending how fast it got executed?
I think you mean a stop loss order at 8 not a limit sell at 8. A limit sell at 8 would mean sell for 8 or greater.
See if your broker offers a "stop limit" - you could have the stop loss at 8 but a limit at say 7.50 meaning it won't sell if the market price goes lower than that
Acgood is right. With JCP currently trading around $9, A limit order of $8 on JCP would likely trigger right after you placed it at whatever the market price happens to be at the moment. You want a stop order or a stop-limit order, not a limit order.
Let's say the market closes at $8.5, then the company announced earnings at 4:30 pm, and it's really bad, the price dropped to $6.
Good until cancelled day orders are outed at 4pm. An after hours drop in price would not be affected until it opened the next day.
On days where JCP might have some news you might want to keep up with the news so you can change your order before the market opens the next day. Evaluate the news and decide if you want to leave the limit price in place or change the order in some way.
if the stock is plunging you may get a lower price than your limit.
the limit is the trigger but if the next bid is lower that is what you get
No, you're thinking of a stop order. You won't get a lower price on a limit order than the price you designate.
Quote:
Originally Posted by Tenshi28
Exactly, if something happens that sinks the stock and creates a gap, then your stop loss is pretty much useless, unfortunately.
Again, true for a STOP order, not true for a LIMIT order, which is what the OP asked about.
Quote:
Originally Posted by howard555
On days where JCP might have some news you might want to keep up with the news so you can change your order before the market opens the next day. Evaluate the news and decide if you want to leave the limit price in place or change the order in some way.
Again (and again and again), you wouldn't want that limit order in place to begin with. It would serve no purpose--your shares would sell as soon as you placed the order (or as soon as the market opened, assuming the limit price was still below the market price). To protect yourself, you would want a STOP order or a STOP-LIMIT order. Limit orders to sell are typically placed ABOVE the current price to lock in a GAIN when the price goes UP. Yes, sometimes they're placed below the current price (by just a few cents), but only when your goal is to sell your shares IMMEDIATELY while ensuring you don't sell for less than intended. But placing a limit order $1 below the current price makes no sense. Might as well just place a market order if you're going to do that.
Question for the experts, for example if I hold a stock say, JCP, currently priced at $9.
If I put in a order to sell limit order of $8 until cancel, meaning sell when it reaches $8 or below. Let's say the market closes at $8.5, then the company announced earnings at 4:30 pm, and it's really bad, the price dropped to $6.
Will my limit order execute at $8.5 or $6? or anywhere in between depending how fast it got executed?
If the stock is $9 and you place a limit order to sell at $8 it will sell at $9 if the market maker wants to be nice. If not you might get filled lower than $9 as the stock may be moving up and down around $9 at the time.
It was obvious you were referring to stop orders.
Or you'd not used prices lower than $9 and as low as $6 in your example.
Those are not executed after hours or pre-market. If you have a stop limit or stop order and you are not able to be there at 9:25am to change the price or cancel the order then yes you could / would be filled at the market price at 9:30am if the stock opens at or below your stop price.
With any stock where you wish to use stop orders or stop limit orders, keep up with the news of your stock or consider getting out and forget the investment if you can not follow news that could cause the stock to drop dramatically in a matter of minutes or over night.
Uncle Cramer does not like stop orders. You can be filled on a small dip down only to see the stock rocket higher. Better to use a "mental stop" a price at which you will sell no matter what, because you want out, because it is has fallen 15% etc.
Last edited by howard555; 11-19-2013 at 08:33 AM..
i think you mean a stop loss order at 8 not a limit sell at 8. A limit sell at 8 would mean sell for 8 or greater.
See if your broker offers a "stop limit" - you could have the stop loss at 8 but a limit at say 7.50 meaning it won't sell if the market price goes lower than that
You want a stop order or a stop-limit order, not a limit order.
^^^^ This.
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