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If that size is exceeded then the price will usually change ' and generally, that small price change will move slightly against you since you're creating a demand for that stock. The difference between the bid price and the ask price is called the 'spread'. As a general rule, it's not a good idea to use limit orders when selling stocks as the market could make a big move against you without ever hitting your limit price and you'd be stuck with a big loss. Article: Do you ever wonder exactly what’s going on in the trading pits in lock-step with you’ve sent an order to purchase stock? You’ve no doubt seen market quotes either online or even in the newspaper. Have you noticed that there are all the time two sets of prices given? What exactly do those mean and where will my order get filled? Let’s discuss the rudiments of the two prices you see. Let’s say you’re trading stocks. The first price (usually the one on the left) is titled a “bid”. This is the price at which the market is offering to buy the stock. If you sell your stock at the market, this is the price that you’ll get. The second price (usually located on the right) is the “ask”. This is the price at which the market will sell you the stock. If you submit an open order to buy shares at the market, you will get them for the ask price. other element that comes into play sometimes is the size of the bid and ask. Usually, there’s an order size that comes with the bid and ask. If that size is exceeded then the price will usually silver – and generally, that small price metamorphosis will move slightly opposite to you since you're creating a demand for that stock. The difference among the bid price and the ask price is the “spread”. If you look at the spread of a large cap stock that trades over a million shares a day, and draw a parallel that to a small cap stock that only trades a thousand shares a day, you’ll see a huge difference. Stocks that are more liquid (or more activity) will have much smaller spreads than those with less activity. Thus, you will get a civilize fill (or deal) for a market order on a more liquid stock. One tool you can use to possibly improve your price is to use limit orders. If you want to buy XYZ at no more than $12 and the bid is $11.50 and the ask is $12.50, you can place a purchase order with a limit of $12. This means that the order won’t be filled unless you can get it for $12 or better. One word of tip-off with limit orders is that the market could run away without you if used with a buy order. And if your order is filled, you’ll be purchasing power the stock on a downtick, which means it could be making a major move down. As a general rule, it’s not a good idea to use limit orders when selling stocks as the market could make a big move opposed to you without ever hitting your limit price and you’d be stuck with a big loss. Robert G. Allens Challenge. - 1 New York Times Bestselling Author Needs Your Success Story. The MasterTrader eBook. - Your complete guide to active trading/day trading. Learn proven strategies and make money consistently! Article Index: | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20 | 21 | 22 | 23 | 24 | 25 | 26 | 27 |
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