Use the limit order to get a good deal

The concept of a limit order is that the investor only desires to buy an asset for no more than a specified price or sell for no less than a specified price.  The limit order is an option that is offered by stock trading brokers.  In this case the principle is the same.  A buy limit order limits the price of what you are willing to buy the stock for and a sell limit order limits what you are willing to sell the stock for.

The opposite option of a limit order is a market order.  In this option your buy trade is immediately executed against whatever is the best available selling price.  The problem here is that price may be higher than the current reflected per share price.  The orders go through a computer system, where buyers and sellers are matched and the market “clears”.  Your buy transaction may be the unlucky one that clears a percent or two above market price.

Avoid this by maintaining your cool and willingness to wait to get into or out of a stock.  The market is efficient, but people are not.  By taking this into account, setting a limit a little lower than market price for a buy, and perhaps using the 30 day or good till canceled option; you can buy the stock that you are looking at for a modest discount.  Or as a seller, your patience can be rewarded by gaining a premium for your investment sale.

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Carlisle Mitchell - Real Estate

Carlisle Mitchell - Insider Tips for Real Estate Investors. Expert investment & market analysis for real estate investors world-wide.

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