Buy limit order AH

Discussion in 'Order Execution' started by Siciliano, Jul 26, 2015.

  1. Siciliano

    Siciliano

    Hi everyone,

    First post here. I've been trading for quite a while, but only recently started getting into actively trading after hours. This time slot can clearly be very juicy, particularly during earnings season.

    My main issue lies with the lack of a buy stop order option being available in AH trading...only limit orders are accepted. From what I've read, a buy limit order will only execute if the stock comes DOWN and goes "through" my set limit price. Is this correct?

    Essentially, I'm trying to figure out how to quickly jump into a stock that is quickly climbing in AH. Here's my specific example:

    AMZN just recently reported earnings about 10 or so minutes after the bell. I had a VERY strong inclination/hunch that they were going to beat, so I put a buy limit order ABOVE the current bid, knowing the price would jump up, and it didn't get filled. I had to keep placing my limit order as I saw the price jumping ahead of me very quickly. By the time my order got filled, I lost out on most of the action. If buy STOP orders were allowed AH, this issue wouldn't exist, but alas, only limit orders are accepted.

    So, can I not place a buy limit price higher than the current bid? Does the stock price have to come *down* through my limit price in order for it to get filled?? Or, is this a simple issue of liquidity? i.e. no one was selling at that moment so there were no shares available... If so, my question then would be, how did all those people buy shares right as the price started rocketing if there were none available???

    I appreciate any and all replies. I missed out on at least $30k on the AMZN trade because of my ignorance on this matter, and I'm trying to have that never happen again!

    Thanks!
    Joe
     
  2. Siciliano

    Siciliano

    I've been researching this, and different sites indeed have different information.

    Some sites claim a buy limit should only be set below the current ask, while others clearly state it could be set below OR above ask. If set above ask, it's considered a "marketable limit order". This site explains that scenario: http://canadiancouchpotato.com/2014/12/15/the-limits-of-limit-orders/

    So with that, I believe I've answered my question: in AH, I might just set a few consecutive buy limit orders above the ask when I think the stock is going to run away to the upside...just to ensure the order gets filled. Although there's a chance both orders will get filled, and that would be fine too.

    Any comments/input are welcome.

    Thanks!
     
    Last edited: Jul 27, 2015