Placing a limit order example

[DesignerBud]

Hi,

I was just wondering if someone could help me out with this situation:

Basically I've noticed that when the DOW goes up our stocks go up. So with this in mind I've placed a (pretend) limit order now (because I can't place an 'at market' order now as the market is closed, correct?). I've purchased 65 shares of BHP at limit order at $31 as that is when it closed and is the price at the moment.

(http://asx.com.au/asx/markets/PriceResults.jsp?method=get&template=F1001&ASXCodes=bhp )

Now let's assume my prediction is correct and bhp goes up for the day (therefore will open higher when the market opens) will my $31 limit order be processed, given that is what the price is now, if the market is going to open higher the next day? Or will my limit order be skipped?

 

[So_Cynical]

Re: beginner Q: Placing a limit order example

Hi,

I was just wondering if someone could help me out with this situation:

Basically I've noticed that when the DOW goes up our stocks go up. So with this in mind I've placed a (pretend) limit order now (because I can't place an 'at market' order now as the market is closed, correct?). I've purchased 65 shares of BHP at limit order at $31 as that is when it closed and is the price at the moment.

(http://asx.com.au/asx/markets/PriceResults.jsp?method=get&template=F1001&ASXCodes=bhp )

Now let's assume my prediction is correct and bhp goes up for the day (therefore will open higher when the market opens) will my $31 limit order be processed, given that is what the price is now, if the market is going to open higher the next day? Or will my limit order be skipped?

Skipped....assuming BHP gaps up at open.

If it was that easy we would all be rich.

 

[DesignerBud]

Re: beginner Q: Placing a limit order example

That's what I thought. So what creates the big gap in price if all limit orders that are placed before the market opened, based on the close of the day price are skipped?

 

[jackson8]

Re: beginner Q: Placing a limit order example

That's what I thought. So what creates the big gap in price if all limit orders that are placed before the market opened, based on the close of the day price are skipped?

depending on sentiment at limit orders may be placed on the buy side which are higher than the last sale price , more bidders placing orders higher and higher because they want a piece of the action will force the price up

as sellers see that the interest and bid price is rising they may raise their ask prices therefore requiring the buyers to pay more if they want the shares

simple auction process similiar to when purchasing a house via auction

 

[kam75]

Hi,

I was just wondering if someone could help me out with this situation:

Basically I've noticed that when the DOW goes up our stocks go up. So with this in mind I've placed a (pretend) limit order now (because I can't place an 'at market' order now as the market is closed, correct?). I've purchased 65 shares of BHP at limit order at $31 as that is when it closed and is the price at the moment.

(http://asx.com.au/asx/markets/PriceResults.jsp?method=get&template=F1001&ASXCodes=bhp )

Now let's assume my prediction is correct and bhp goes up for the day (therefore will open higher when the market opens) will my $31 limit order be processed, given that is what the price is now, if the market is going to open higher the next day? Or will my limit order be skipped?

A Limit order at $31 means you will be filled at 31 or better. If the market never trades at 31 or less, you ain't gonna get filled. An easy way to think of it is that you are telling the broker you wanna pay a maximum of 31 bucks for your share and not a cent more.
regards