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When investors are in a hurry to buy or sell a stock, they tend to take leave of their senses They log on to their online accounts and click buy or sell as fast as they can. As a result, they’re almost certain to pay more when they buy and get less when they sell. Here's why market orders are such a bad Idea: 1) The bid-ask spread can kill you The asking price of a stock is often significantly different from the last bid. If you place a market order, you’ll wind up giving the seller his dream price. By placing a limit order for a few pennies below the ask price, you can almost always get the stock for less Similarly, by placing your ask price a little higher than the current bid, you can get a little more. While the pennies might not seem like a big deal, they add up when multiplied by hundreds of shares and dozens of transactions. Remember that most stock prices fluctuate a great deal in the course of a few weeks or months Even hot stocks have low spots, and losers have blips. Limit orders help you take advantage of those fluctuations. 2) Hot news can be disastrous The price of a stock can jump or sink buy several dollars in a few seconds if there’s a buyout rumor or a whiff of bad news Very often, those price movements are an overreaction, and the price of the stock evens out. But if you happen to have your buy or sell order in just as that action is taking place, you may lose a small fortune. 3) The entire market can tum without waming Ever hear of a flash crash? Put your sell order in at the wrong time, and you could be looking at thousands of dollars less than you expected to receive on your stock ale. By placing a limit order, your execution will be delayed until the market retums to equilibrium. 4) Placing limit orders is a great education By placing limit orders, you’ll leam just what you can and can’t do in the market. When you know you want a stock at or near its trading price, try a limit order that's good for one day. When the stock price is too ligh, try a “good till cancelled” order. Can you get more visit: Share Market Tips
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