| Orders |
| Market vs. Limit |
| Limit
orders provide control for the investor. BUY: Specify the highest price you are willing to pay. SELL: Specify the lowest price you are willing to accept. Buyer and seller may meet somewhere in between --- especially in efficient, liquid (higher volume) markets. |
| A
market order abdicates all control over buy and sell prices. Market orders tend to minimize profit and maximize loss. Where, other than in a hot stock market, would a person go to purchase an item and tell the salesman, "OK, charge me whatever you like"? ...Or go to sell something owned and tell the buyer, "OK, I'll take whatever you want to pay me for it"? |
| Market orders tend to provide higher purchase prices and lower sell prices. |
| A market order maximizes your chance of doing the trade --- getting in and getting out. |
| See also: Greatest Fool |
| The investment axiom that is always valid: Caveat Emptor |
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