Investment Language 101 Series: TERM OF THE DAY: -- 'What is ' Buy Limit Order ' | E.18 | Trading Candle Cheat Sheet Incl. Each Episode.
A series designed to help all the new people flooding into & entering Crypto/Investments daily who get thrown into the rabbit hole so to speak and everything is new to them.
It is a TLDR / Short Form Series, covering ONLY one thing each episode in blue collar, easy to understand language to give a SHORT OVERVIEW of the term or lesson of the day.
It is specifically designed this way to keep it short and simple.
People can then search out extra info if they wish.
I've never seen a regular series or resource running on Steemit to continually address this basic need so I decided to do it.
TERM OF THE DAY:
What is....
What is ' Buy Limit Order '?
--
A buy limit order is an order to purchase a security at or below a specified price, allowing traders and investors to specify the price they are willing to pay for a security, such as a stock.
By using a buy limit order, the investor is guaranteed to pay that price or better, meaning he pays the specified price or less for the purchase of the security.
While the price is guaranteed, the filling of the order is not; if the specified price is never met, the order is not filled and the investor may miss out on the trading opportunity.
--
Breaking Down...
' Buy Limit Order ':
--
A buy limit order ensures that negative slippage does not occur.
The buyer does not get a worse price than he expects. Buy limit orders provide investors and traders with a means of precisely entering a position.
For example, a buy limit order can be put in for $2.40 when a stock is trading at $2.45. If the price dips to $2.40, the order is automatically executed.
Advantages of Buy Limit Orders
--
Unlike a market order in which the trader buys at the offer price, a limit order is placed on a broker/dealer’s order book at the specified price. This has the same effect as having an order placed at the bid, signifying that the trader is willing to buy a specific number of shares of the stock at the specified limit price.
As the market trades downward toward the limit price, the trade is executed when the limit price becomes the inside bid, thus the trader buys the stock at the lower bid price and avoids the spread. This is very helpful for short-term intraday traders who seek to capture small, quick profits on momentum and swing trade. For large institutional investors who take very large long positions in a stock, incremental limit orders at various price levels are used in an attempt to achieve the best possible average price for the order as a whole.
Disadvantages of Buy Limit Orders
--
As mentioned earlier, a limit order does not guarantee execution. This happens when the market price trades down to the limit price, be it buy or sell, and immediately turns around and trades right back up. When this happens, the limit order is triggered but not executed, because every trade thereafter is above the limit price at the bid. This phenomenon happens more often on securities that have wider spreads.
Market orders to buy a security are executed at the offer price, the higher of bid/offer quotes. Consequently, the market has to trade downward across the spread to the lower bid price so that limit orders can be executed. When the spread is wide, the market may turn back up within the spread, thus missing the trade. Another disadvantage of buy limit orders is the higher commissions that brokers typically charge for them.
Trading Candle Cheat Sheet:
--
Further Reading/Source/Resources
Friend of the People -- Enemy of the State.
--
I am leaving these images I made here until I figure out one that fits properly and looks right for the first/main image for the post/series.
--
Since Steemit dev's changed the size of the picture frame that shows, it has honestly been a real problem getting images to match the screen, it was perfectly fine months ago before they messed around with it.
SMH.
Thanks for reading, have a nice day.
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Most Images: Gif's - via Giphy.com , Funny or Die.com / Pixabay. Today:
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Please note -- I will have limited internet access for awhile -- so PLEASE do not be upset that I cannot reply right away, or to everyone. I am dealing with some changes, and will have limited time online and will be happy if I get a few blog posts up a week.
This has really upset some people but I do not force my opinions on others, or need to communicate every detail of my life or issues, most people do not care anyways. I invested around 10 hours or more a day on Steemit most of my first 13 mths here, trying to build community, put out content and engage people, help and donate to people, and I just do not have that time in my life right now, and that includes for replies and voting/curation.
I have done my best, sorry if you do not understand like some are clearly having a problem with. It's a blogging platform, and I will do my best at everything, and to keep blogging.
Carry On.
A series designed to help all the new people flooding into & entering Crypto/Investments daily who get thrown into the rabbit hole so to speak and everything is new to them.
It is a TLDR / Short Form Series, covering ONLY one thing each episode in blue collar, easy to understand language to give a SHORT OVERVIEW of the term or lesson of the day.
It is specifically designed this way to keep it short and simple.
People can then search out extra info if they wish.
I've never seen a regular series or resource running on Steemit to continually address this basic need so I decided to do it.
TERM OF THE DAY:
What is....
What is ' Buy Limit Order '?
--
A buy limit order is an order to purchase a security at or below a specified price, allowing traders and investors to specify the price they are willing to pay for a security, such as a stock.
By using a buy limit order, the investor is guaranteed to pay that price or better, meaning he pays the specified price or less for the purchase of the security.
While the price is guaranteed, the filling of the order is not; if the specified price is never met, the order is not filled and the investor may miss out on the trading opportunity.
--
Breaking Down...
' Buy Limit Order ':
--
A buy limit order ensures that negative slippage does not occur.
The buyer does not get a worse price than he expects. Buy limit orders provide investors and traders with a means of precisely entering a position.
For example, a buy limit order can be put in for $2.40 when a stock is trading at $2.45. If the price dips to $2.40, the order is automatically executed.
Advantages of Buy Limit Orders
--
Unlike a market order in which the trader buys at the offer price, a limit order is placed on a broker/dealer’s order book at the specified price. This has the same effect as having an order placed at the bid, signifying that the trader is willing to buy a specific number of shares of the stock at the specified limit price.
As the market trades downward toward the limit price, the trade is executed when the limit price becomes the inside bid, thus the trader buys the stock at the lower bid price and avoids the spread. This is very helpful for short-term intraday traders who seek to capture small, quick profits on momentum and swing trade. For large institutional investors who take very large long positions in a stock, incremental limit orders at various price levels are used in an attempt to achieve the best possible average price for the order as a whole.
Disadvantages of Buy Limit Orders
--
As mentioned earlier, a limit order does not guarantee execution. This happens when the market price trades down to the limit price, be it buy or sell, and immediately turns around and trades right back up. When this happens, the limit order is triggered but not executed, because every trade thereafter is above the limit price at the bid. This phenomenon happens more often on securities that have wider spreads.
Market orders to buy a security are executed at the offer price, the higher of bid/offer quotes. Consequently, the market has to trade downward across the spread to the lower bid price so that limit orders can be executed. When the spread is wide, the market may turn back up within the spread, thus missing the trade. Another disadvantage of buy limit orders is the higher commissions that brokers typically charge for them.
Trading Candle Cheat Sheet:
--
Further Reading/Source/Resources
Friend of the People -- Enemy of the State.
--
I am leaving these images I made here until I figure out one that fits properly and looks right for the first/main image for the post/series.
--
Since Steemit dev's changed the size of the picture frame that shows, it has honestly been a real problem getting images to match the screen, it was perfectly fine months ago before they messed around with it.
SMH.
Thanks for reading, have a nice day.
PixaBay has tons of free pictures for us all to use!!!
Super Easy/Fast Picture Edits / Resizing at: http://www.picresize.com/ and also https://www298.lunapic.com/editor/
If you liked this blog post - please Resteem it and share good content with others!
--
Some of my recent blogs:
--
https://steemit.com/funny/@barrydutton/meme-ing-the-blockchain-or-e-31-or-protecting-the-bitcoinz
Most Images: Gif's - via Giphy.com , Funny or Die.com / Pixabay. Today:
If you feel my posts are undervalued or you want to donate to tip me - I would appreciate it very much.
--
LiteCoin (LTC) - LKdsnvSXk9JW99EiNicFMGKc1FXiBo9tUE
Monero (XMR) - d8ecb02c09f70ec10504b59b96bc1f488af28b05933893dfd1f55b113e23fbff
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Please note -- I will have limited internet access for awhile -- so PLEASE do not be upset that I cannot reply right away, or to everyone. I am dealing with some changes, and will have limited time online and will be happy if I get a few blog posts up a week.
This has really upset some people but I do not force my opinions on others, or need to communicate every detail of my life or issues, most people do not care anyways. I invested around 10 hours or more a day on Steemit most of my first 13 mths here, trying to build community, put out content and engage people, help and donate to people, and I just do not have that time in my life right now, and that includes for replies and voting/curation.
I have done my best, sorry if you do not understand like some are clearly having a problem with. It's a blogging platform, and I will do my best at everything, and to keep blogging.
Carry On.
--
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ZCash (ZEC) - t1aCPEYELkGaf3GtgGTiCEDo7XfPm4QEwmL
Please note -- I will have limited internet access for awhile -- so PLEASE do not be upset that I cannot reply right away, or to everyone. I am dealing with some changes, and will have limited time online and will be happy if I get a few blog posts up a week.
This has really upset some people but I do not force my opinions on others, or need to communicate every detail of my life or issues, most people do not care anyways. I invested around 10 hours or more a day on Steemit most of my first 13 mths here, trying to build community, put out content and engage people, help and donate to people, and I just do not have that time in my life right now, and that includes for replies and voting/curation.
I have done my best, sorry if you do not understand like some are clearly having a problem with. It's a blogging platform, and I will do my best at everything, and to keep blogging.
Carry On.
Basing on what i've known reading a lot of material (I study economy at university), the problem of limit orders is that in case of huge price movements (like flash crashes, see here more info https://en.wikipedia.org/wiki/Flash_crash) the order is executer at the first AVAILABLE price.
So, in case of vertical price colapse, system may execute your sell order at 1/10 of your target price, simple because there is not liquidity in the market. Particullary in traditional markets, where high frequency traders can wipe away all the book liquidity in a very small fraction of second (less than 1/100 second)
These crashes have happened a few times now in the crypto world, and been reported on widely.
It has been a problem.
Consider that flash crasher are easier in regulated market due to the requirement of tecnologically-advanced and stable platform for high frequency traders and other market-distruptive practices to work. Exactly the opposite of slow exchanges.
So, as more bitcoin opens his door to regulated market, those problems will increase
hm well post i like it thanks for shearing
I am earnestly following your investment series... Wish there is a way i wont miss a single one. I will be looking out
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