Limit orders

In by gabriel sciannimanica3 Comments

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gabriel sciannimanica

Hi guys. I have set up a trading system where i receive email signals of which/how many shares to buy at a particular days open. I have some questions around limit day orders (buy and sell).

When a limit day buy order is placed, you can choose the price you want to buy the share for. I have found through research that limit day buy orders only fill at market price or better (cheaper). If you want to get your order filled first to prevent slippage, you can put in a limit order above the market price but i have found that it the stocks settle back at market price.

The same thing seems to happen for limit sell orders in reverse.

Question: Wondering if you can explain how limit orders actually work and get filled – this would shed some light on how to submit orders out of market hours effectively.

  • Edit
    EquityMates

    Hey Gabriel - sounds interesting! We'd love to hear more about your system! Have you listened to our Next Top Trader episode on order types? https://equitymates.com/podcast/next-top-trader-orders/

  • Edit
    gabriel sciannimanica

    Hi yes I understand from the episode that the limit order will fill when the market reaches that limit (hence the name) which makes sense but there are some intricacies to it that are confusing. I.e. how does an order actually get filled by a broker. If I put in a sell order well below market price does it get filled at market price before other people's orders - i.e. is that a way to ensure your order gets filled straight away? Same for buy orders in reverse

    • Edit
      EquityMates

      Hi Gabriel,

      No, that is not a way to ensure your order gets filled straight away. If you put in an order well below market price, it will sit there until your broker finds someone else willing to buy your amount of stock at the price you entered. Sometimes it can sit there for a long time if no one will buy/sell at the price you want. Some brokers put expiry periods on these types of orders.