Limit sell order not a good idea?

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Henry Sadovsky
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Limit sell order not a good idea?

Post by Henry Sadovsky »

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I currently have an open sell order on U.S. TSM (VTI) that is 1% above the 10/13 price at close. Futures trading is now indicating the market may open 10/14 above my ask level. If so, would my order be filled at the market price, or at my lower ask price?

Tx,

H.
"What we can't say we can't say, and we can't whistle it either." | Frank P. Ramsey" | | (f.k.a. Zalzel)
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market timer
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Post by market timer »

My understanding is that a queued limit order will trade at the limit price, while a below-market limit sell that is sent to the market will trade at the market price. Unless someone can confirm otherwise, you should cancel your limit sell order ASAP, unless you want to give someone a free 2%.
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docneil88
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Limit orders before the open

Post by docneil88 »

market timer wrote:My understanding is that a queued limit order will trade at the limit price, while a below-market limit sell that is sent to the market will trade at the market price. Unless someone can confirm otherwise, you should cancel your limit sell order ASAP, unless you want to give someone a free 2%.
I'm confused; why wouldn't his queued limit order also be a below-market limit sell (assuming the market opens significantly above his limit sell price)?

I have put in limit buy orders before the open, and got a better price than the limit I set.

As far as I know, all limit orders are really "limit-or-better" orders.

Suppose I put in a limit order at 7 pm ET on a Monday night; is that when I enter the queue, or does the queue begin at, say, 8 am ET, with all prior orders being counted as arriving at the same time. And does my place in the sell limit order queue only matter if someone else put in a sell limit with the same price, but at a later time?

A broker once told me that market orders are executed before any outstanding limit orders, including outstanding limit orders where the limit price is in-the-money with respect to the market price. Thus, if you're selling at the open a security in a short-term upward trend, an in-the-money limit order may actually get you a better price than the market orders that had to be executed before yours. This has actually happened to me before with a stock that opened dramatically upward; my limit order was in the money at the open, but it didn't execute until a few minutes after the open, and I ended up getting a price a few dollars above the opening price. On the other hand, if the short-term trend is dramatically down, an in-the-money limit sell order at the open could easily execute below where all the market orders filled. Best, Neil
gassert
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Post by gassert »

Market Timer is obviously wrong. If you put in a true sell limit, then your trade will be executed at the market price as long as the market price is above the limit price. In simple terms your limit order becomes a market order. However if theres one or two trades at the very open that are exacuted at lower prices, you could be queued up to receive that - but that has nothing to do with limit/market, just open orders.
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market timer
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Re: Limit orders before the open

Post by market timer »

docneil88 wrote:I'm confused; why wouldn't his queued limit order also be a below-market limit sell (assuming the market opens significantly above his limit sell price)?
That might be the case. I've never used a below-market limit sell order at the open. It sounds like a risky technique. I've sent below-market limit sells during the day, which is effectively a market order. Whenever I've sent a limit order that is not immediately filled, it has only been filled at the limit price.
gassert
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Post by gassert »

if your handle is "market timer" you should certianly be expected to understand the most basic trading functions of the market, no? (or at least NOT respond when asked) We're not deabting partical physics theory or anythign that requires higher brain function.
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Henry Sadovsky
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Thanks...

Post by Henry Sadovsky »

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Thanks all. I will leave my order in place, unchanged.

H.
"What we can't say we can't say, and we can't whistle it either." | Frank P. Ramsey" | | (f.k.a. Zalzel)
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wab
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Re: Thanks...

Post by wab »

Henry Sadovsky wrote:Thanks all. I will leave my order in place, unchanged.
Thanks, H. I just put in a buy order at 50.56. ;)
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jpsfranks
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Re: .

Post by jpsfranks »

gassert wrote:We're not deabting partical physics theory or anythign that requires higher brain function.
I find it's best not to make three spelling mistakes in one sentence when impugning someone else's intelligence.
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baw703916
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Post by baw703916 »

At the market price, no worries.

What Market Timer says is true if you put in an order during the trading day. If the security you're buying is fairly liquid it will (except under extreme conditions--we've had some of those lately!) move pretty continuously in price, and execute as soon as the market price hits your limit. But if you put in a limit order when the market's closed (or you put one that is good for X days) you may get a better price, if the market opens at a significantly different price than it closed.

Best wishes,
Brad
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market timer
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Re: .

Post by market timer »

gassert wrote:if your handle is "market timer" you should certianly be expected to understand the most basic trading functions of the market, no? (or at least NOT respond when asked) We're not deabting partical physics theory or anythign that requires higher brain function.
My main point is that Henry is assuming the open price will be close to NAV, i.e., enough bidders will show up that he won't get a bad fill. I've seen enough screwy things with ETFs to know that this is not a good assumption. He should have adjusted his sell limit price to be closer to NAV. He took an unnecessary risk with no compensation.

I notice that VTI traded as low as 51.62 today (now at 52.76 minutes later in a declining market). Henry, where did you get filled?
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Henry Sadovsky
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Re:

Post by Henry Sadovsky »

market timer wrote: I notice that VTI traded as low as 51.62 today (now at 52.76 minutes later in a declining market). Henry, where did you get filled?
Given what the futures market was indicating, I saw no advantage in leaving my ask at 50.56. I increased it, before the market opened, to 52.56. The order filled at 53.50! That is higher than the open.
"What we can't say we can't say, and we can't whistle it either." | Frank P. Ramsey" | | (f.k.a. Zalzel)
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