A Limit Order: When Is the Best Time to Use It?
Do you use this instrument? When do you apply it? In case you do not know so much about it yet, this review is exactly what you need. Below, you will find the most essential information about this type of orders, their advantages, and the cases when you can benefit from them.
As you know, to earn from stock trading, you should predict price movements. That requires profound experience and skills. Besides, to catch the moment when the price will reach an optimal level, you will have to constantly monitor the situation. But what if you have a full-time job and do not have time for that? Try limit orders.
When you choose this function, you can specify the price, at which the assets chosen will be sold or bought. As a result, you can sell and buy at the prices, which are more profitable to you than those currently available on the market. Besides, the use of a limit order will protect you from losses related to rapid and dramatic price fluctuations.
And, when you opt for market orders, you are forced to trade at those rates, which are currently available. Yes, your trade will be executed immediately, but the price may be not as high or low as you want. Besides, there is a risk of unexpected changes.
That is why, if you want to get the best price and have some time in reserve, it is better to choose a limit order. You will not have to constantly watch price movements. Your deal will be executed automatically when the optimal price is reached. That will relieve you from unnecessary stress and save time.
To sum up, limit orders are the best choice when you plan to buy or sell a big volume of shares, especially if they are characterized by low liquidity, and you do not need the money urgently.