"At Limit" Orders

[Lucstar]

Hi guys, i have a question about "At Limit" orders. When i place an "at limit" order. Does that mean i am willing to pay UP TO that particular price or does it mean i am GOING TO PAY that price? For example if ABC stock was closed at $1 on friday and i placed a $2 "at limit" order on sunday. On monday, when the market opens, ABC opens at $1.30. Does this mean i will buy this stock for $2 or $1.30?

Thanks for your help

 

[clowboy]

Generally speaking it would mean that you would buy the stock at $1.30 however "at limit" means just that.

So if you were to put an "at limit" order in for a stock (abc) then you could potetially pay anything up to that price.

Generally speaking you still pay an "at market" price, that is to say that your order executes at the lowest selling price avaliable at the time.

The main thing with an "at limit" order is, as an example a when you are buying a large amount of a stock.

If you were to put an order in for example of MUL for 1000 000 with an at limit price of 3c then your order would execute (starting with the lowest selling price) up to 3c and if it was not completley filled would remain as a buy order at 3c.

This may result in many smaller parcels of shares being bought by your buy order. that is to say that you may buy some of the stock at 2.7c most of them at 2.8c and some at 2.9c (obviously this is dependant on your order size and the stock avaliable at the time of execution.

In short a "at limit" order is designed to do just that.

Why would you limit it to $2 on a stock that is trading at $1???
Potetially it could trade all the way to $2 and most likely that is not what you want to do.

If you want a stock to execute no matter what then it would be advisable to decide your limit (ie if I wanted to buy NAB at < 27.50 a share then I would place an "at limit" order for the stock at $27.50 and most likely pick the stock up at around $27 (there rough cureent trading price) but I may have to pay the ful $27.50 for them.

An exaqmple of a time in which you would place an at limit order is if you wanted to be the potential first person to buy the stock at roughly there current trading price.

If you place an order "at market" for a stock and there are already 35 buyers then you would become the 36th person in the cue to buy that stock.
placing an at limit order for the stock 5c above the asking price potetially places you on top of the queue (unless somone "outbids" you).


In short while it is highly like;y that a stock would move that fast it is possible and you should never set your "at limit" price higher than you are willing to pay.


I hope this helps as it is rather jumbled.

 

[Mofra]

Clowboy,

If you were to place an order on Sunday your order would be processed with all the pre-open market orders on Monday. If you notice (especially for the bluechips) that on closing price of say $30 for CBA, there will be sell orders well below this & buy orders much higher than this. From 10am the ASX begins opening in alphabetical order, and all orders are processed through (so I'm told) a four stage algorithm to determine an opening price. If for example CBA opened at $30 on Monday, all the buy orders above this & all the sell orders below this would be matched & filled AT the $30 opening price.

There is more info on the ASX site which could probably explain it better than I could.

Good luck