Buying shares "at limit"?

[Carina86]

Hi guys,

I just put in my first ever share order - YAY!

I was just curious about how buying 'at limit' instead of at market value works.

My order was for a company who's shares are 0.75c so I thought I would put in an at limit order of 0.70 to get a good price. (The shares have fluctuated a little throughout the day and it has gone down to 0.70, however my order mustn't be anywhere near the front)

How long does it usually take an 'at market' order to go through as opposed to an 'at limit' order. Do you normally try to buy a fraction below the market price?

 

[tech/a]

At market immediately.

Limit depending on where you are in the Q
and whats available for sale.
You can also (If with someone like IB) do Stop limit Orders

IE
Buy at .75c stop limit .77 so anything that comes up between that price and you'll be filled once price reaches 75c.
Stops you getting caught for instance is a crazy open auction where you "Could" get hit with bad slippage.
IE your at market order opens at 83C then falls back to 70C.

 

[BrightGreenGlow]

I also use limits, that way you know exactly how much it will cost you.

 

[RamonR]

I always buy at limit.
But if the company you are trying to buy doesn't have much liquidity then it can take some time.

You can get some idea of how many people in queue before you by checking out the market depth.

 

[pixel]

I always buy at limit.
But if the company you are trying to buy doesn't have much liquidity then it can take some time.

You can get some idea of how many people in queue before you by checking out the market depth.

Market Depth can be a useful tool; but it can also be deceptive.
Especially when a stock is extensively traded by short-term online traders or computerised algorithm ("'bot") trades, the m/depth is next to useless because it changes so quickly and the really market-moving transactions will come from off-screen anyway.
Can't really blame anybody - especially if they have a "substantial" interest in a stock - for not disclosing their orders for all to see. When you play Poker, you don't hold the cards back towards you either, but rather pictures close to your chest...

Today's NMS action was a good case in point:
Resistance could be seen on the chart at 28c, and that's where initially a long line of sell orders was sitting; in early trading, that "served its purpose" by fooling retail punters to sell into the - far fewer - bids at 27c and below. At the stroke of noon, over 3 Million shares were suddenly bought up, and it was "game on" from there.
Unless you knew who was behind it and which way the 'bots were trading, it was a gamble to place a low bid - say, at 27c - and risk getting filled on the way down. Once resistance had been taken out, there was only one logical way: Up. In runs like that, I tend to top up, moving with the bigger trades; always determining how much (more) I'm prepared to pay and where to place my "at limit" orders - usually one or two pips away from the current action.

 

[Julia]

At market immediately.

Provided there's sufficient liquidity.

 

[akkopower]

Provided there's sufficient liquidity.

if there is insufficient liquidity can u even put in an at market order?

 

[pixel]

Provided there's sufficient liquidity.

hahahaha Julia - so true!
If liquidity (e.g. bids down to zero) is lacking, an accidental zero too many on an "at market" sell order could wipe out a share, couldn't it? Wasn't that what was alleged to have been the case a few weeks ago when "butter fingers" caused the Dow to dump?
I've got my reservations there, but some spruikers offered something like that as an explanation.

btw I've never placed an "at market" order, and must ask to be forgiven if my assumption is incorrect: Is it not true that, if there are 500 shares on offer at each of the levels $1, $1.10, $1.20 (and nothing in between), an "at market" buy order for 1200 shares would buy 500 @ $1, 500 @ $1.10, and 200 @ $1.20?

Whereas I am absolutely positive that an order for 1200 "at limit" $1.10 would buy 500 each at $1 and $1.10, but leave a $1.10 bid for 200 shares.

 

[skc]

btw I've never placed an "at market" order, and must ask to be forgiven if my assumption is incorrect: Is it not true that, if there are 500 shares on offer at each of the levels $1, $1.10, $1.20 (and nothing in between), an "at market" buy order for 1200 shares would buy 500 @ $1, 500 @ $1.10, and 200 @ $1.20?

Whereas I am absolutely positive that an order for 1200 "at limit" $1.10 would buy 500 each at $1 and $1.10, but leave a $1.10 bid for 200 shares.

That is correct with the at market order.

I wonder what happens if there are only say 10000 shares on the ask and you put in at market order for 12000 shares... where would the last over bid be placed??

 

[akkopower]

if there is insufficient liquidity can u even put in an at market order?

I wonder what happens if there are only say 10000 shares on the ask and you put in at market order for 12000 shares... where would the last over bid be placed??

indeed a fantastic question to be asked

 

[tech/a]

indeed a fantastic question to be asked

At the last price filled.

 

[akkopower]

At the last price filled.

what if u put an at market buy in and there are zero sellers?

 

[tech/a]

It would sit there until a sell order was logged then be executed it would not be seen in the depth.

 

[Timmy]

what if u put an at market buy in and there are zero sellers?

if you are a short trying to cover then you're f*cked

 

[pixel]

if you are a short trying to cover then you're f*cked

not necessarily, Timmy;

1. If you're Short and the company is suspended, you can hope they go bust.
2. If they're not suspended, but nobody is willing to sell, placing an "at market" buy order would be as idiotic as writing a blank cheque. (Anybody wanting to buy a share at any price, please ask me privately: If I have the stock, I'll fill in the zeroes no problem
3. If you're short and there is no bid, place a buy order at limit 0.1c; maybe one bright spark will take it, and you'll be able to return the short-sold stock at almost 100% profit.

So, now you know why only very few people place orders "at market". I definitely don't. Never Ever.

 

[DB008]

I usually buy "at market" 99% of the time. Use St George (have no choice at the moment with what broker l use). Anything under 50cents, with St George, you have to place a "at limit" order.

I've only been trading a few years. I have 2 styles l trade with.
1) Small parcel, say 5k, where do you do want the share price to rise, ie, around 10% minimum. Do that 10 times, bingo!
2) Big parcel. Volume trade. Say 50k worth of BHP, where a $1 move could make you a grand in 1 day. So, l'm not really interested in % move, just $$$ move.

Eg; If I are buy 50k worth or BHP at $39.15 and selling for $40.15, then your making $1 per share held (minus brokerage). 50k bhp@ $39.15=1277 shares minus brokerage, so, lets say 1275 shares. Rises $1, sell and bingo, theres your milk money.


I'm always learning. Picked up a few tips here on ASF too. Like, selling half your stock if you get a 100% return, so that you have a free trade plus your starting capital back.

 

[Wysiwyg]

I'm always learning. Picked up a few tips here on ASF too. Like, selling half your stock if you get a 100% return, so that you have a free trade plus your starting capital back.

I have also seen stocks and mainly speculators that go down and down and down after their meteoric rise and never to revisit the old highs. One stock that tripled to $1.20 is now sitting around 5 cents. Choose wisely if this is a strategy.

 

[jimdicko]

The reality of the situation is, if a brokers DTR's let you place an "at market" order on a stock with no opposing liquidity - they would be shot.

What would (should) probably happen is the DTR would "work the order" and place an at limit at the last traded price to try to get executed. Then if liquidity starts to appear on the opposing side they would start executing -- assuming that the % price movement that the order would cause did not breach ASX market or house rules...

On a stock that illiquid, there is no question limit orders would be the preference of most traders - this is where you start to see wide buy/sell spreads.

 

[BrightGreenGlow]

In regards to Blue Chip shares. Why would you ever want to buy at market?

 

[pixel]

An Update to this thread may be in order:

Some time ago (can't say when) the ASX changed the rule about orders. According to my brokers, "At Market" orders are no longer accepted; a limit has been set for every bid or offer. And if the limit differs from current "Market" trading level by more than 15%, the order must be reviewed by a Broker.

I reckon that makes good sense in that it avoids "butter fingers" wiping the buy side down to zero as happened not long ago to QBE.