Today I placed a marketable limit order to buy VEU when it had a bid/ask $43.63/$43.64. The limit I set was $44 or better, and the purchase was made in 3 lots: 50% at $43.635, 10% at $43.637, and 40% at $43.639. I picked the limit by calculating roughly 1% higher than the current ask to be pretty sure the order would close without needing to refresh quotes and monitor if it executed or not.
Is there a general recommendation on how big of a buffer to Buy over ask or Sell under bid? Some percentage or dollar amount?
Marketable limit order buffer %/$
Re: Marketable limit order buffer %/$
I would have put the limit much close to the ask, say $43.64. 1% higher is a HUGE amount that I would not ever suggest.
I bought BND with market orders today. The spread was one cent at the time and I got half-way between bid/ask.
My feeling is that sometimes a limit order gets "hung up" by your broker so that your broker can take advantage of it. I feel that for under 100 shares or an amount of shares not divisible by 100 (so 100, 200, 300, … shares), a market order that gets past any delays built-in by your broker for odd lots and limit orders is sometimes better. Sometimes, I even break orders up. For instance: If I want to buy 248 shares, I will submit two orders: one for 200 shares and a separate one for 48 shares. Maybe it is just superstition on my part, but I am going by personal experience using at least 3 brokers.
I bought BND with market orders today. The spread was one cent at the time and I got half-way between bid/ask.
My feeling is that sometimes a limit order gets "hung up" by your broker so that your broker can take advantage of it. I feel that for under 100 shares or an amount of shares not divisible by 100 (so 100, 200, 300, … shares), a market order that gets past any delays built-in by your broker for odd lots and limit orders is sometimes better. Sometimes, I even break orders up. For instance: If I want to buy 248 shares, I will submit two orders: one for 200 shares and a separate one for 48 shares. Maybe it is just superstition on my part, but I am going by personal experience using at least 3 brokers.
Last edited by livesoft on Wed Sep 02, 2015 2:20 pm, edited 1 time in total.
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Re: Marketable limit order buffer %/$
The spread of VEU is very small. I don't see a need to go higher. If you really want to make sure it executes, just set it a few cents higher than the asking price.
Last edited by indexfundfan on Wed Sep 02, 2015 2:17 pm, edited 1 time in total.
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Re: Marketable limit order buffer %/$
I think your strategy of "just a bit" (assuming you didn't have any "rule") is fine.harikaried wrote:Today I placed a marketable limit order to buy VEU when it had a bid/ask $43.63/$43.64. The limit I set was $44 or better, and the purchase was made in 3 lots: 50% at $43.635, 10% at $43.637, and 40% at $43.639. I picked the limit by calculating roughly 1% higher than the current ask to be pretty sure the order would close without needing to refresh quotes and monitor if it executed or not.
Is there a general recommendation on how big of a buffer to Buy over ask or Sell under bid? Some percentage or dollar amount?
It should be adjusted so it won't exceed what you are *willing* to pay.
As you've noticed, it often executes below the limit entered, so the real goal is to avoid paying too much in a blip.
RM
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Re: Marketable limit order buffer %/$
For me, the goal is to never pay the posted ask price, but to pay less. Also, when selling my goal is always sell higher than the stated bid price. A secondary goal is to sell at the high price of the day or to buy at the low price of the day.ResearchMed wrote:As you've noticed, it often executes below the limit entered, so the real goal is to avoid paying too much in a blip.
RM
Re: Marketable limit order buffer %/$
What does "marketable" mean in this context?
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Re: Marketable limit order buffer %/$
https://personal.vanguard.com/pdf/ISGETF.pdfleonard wrote:What does "marketable" mean in this context?
Marketable limit order. A limit order whose limit price is set either at or above the best “offer/ask” when buying or
at or below the best bid when selling. This essentially accomplishes the same goal as a market order, but with some
price protection.