simple LIMIT order question

Discussion in 'Order Execution' started by killATwill, Sep 19, 2007.

  1. Hey guys, Limit orders are supposed to be executed at the specified price "or better", but is there really an "or better"?

    If stock XYZ has a bid/ask of 9.99 and 10.01, and I place a limit at buy 10.20, will I get filled at 10.01 or 10.20? Which is more likely?

    Also, any idea how limit orders work with regard to gap-down openings?

  2. JamesJ


    depends on the size of your order.
    stock A 9.99/10.01, with 1000 shares offered at 10.01.
    you buy 200 limit 10.20 -> executed @ 10.01.
    but if you buy 5000 limit 10.20, you only get 1000 @ 10.01, and the rest at higher prices (if theres an offer at 10.02 of 1000 you get this another 1000 at 10.02 and so on), but not higher than 10.2, because if there aren't enougth shares offered between 10.01 and 10.2 your order (the rest of it) will just be the new bid in the order book.

    at market open (NYSE, NASDAQ) there is a matching, so, if your buy limit is higher than fair market price you will get executed at this market price anyway.
    for example: you enter a 1000 buy order with limit 25 for CFC routed to NYSE (not an ECN!!), then this will be executed at 20 or something, just the first market price (the matching price).
    however i see no reason to enter a buy limit much above current ask.
  3. Thanks much JamesJ. Excellent response.

  4. The reason I'm asking is because I want to know what happens to limit orders that are sent before the market open if the market gaps down significantly. from what you mention, if the order's limit price is significantly above the opening price, and the liquidity is there, the order will probably fill closer to the opening price than the limit price. hope i have this right.
  5. I have painful repeated experience that if there was no significant trading in pre -open time I will get sometimes fill around the close price and share price gaps down immediately AFTER I purchased it. With something like RIMM or GOOG no problem but with less liquid shares big danger. I suggest wait for first candlestick /what can happen after few minutes by quite liquid shares as well/ or try some fishing well bellow the close price.
  6. To be sure to get the limit price "or better" at the opening, simply marke the order "OPG" for opening only. If the stock opens above your bid, the order is automatically cancelled, and you can replace with a day order if you like.

    NYSE of course, no "official" opening print on the OTC markets.