Investing Sr. Associate
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| Are limit orders matched with open market orders? what i really want to know is if you place a limit order and someone places a buy ar market price are they matched and executed? example limit order 500 shares at 1.00 placed by joe and richard places an open order for 500 at market value- are these matched and executed? |
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Investing Manager
Joined: 01 Oct 2005
Posts: 206
This Month: 0
Location: Elgin, IL USA
76546.66 e$
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Every order executed (with real money) ends up with a buyer and a seller, so if you placed a limit order to buy at $1.00 (bid), a seller would either need to lower their ask to that (or lower), or someone would have to enter a market order to sell when there were no higher bidders.
But if there are more bids than asks, you may need to wait in line until there are enough sellers at or below your buy limit (or market orders).
In some cases people try to drop the price down far enough that it trips out stop orders, which can immediately become market orders. Since there may be a limited number of shares stopped out, by the time others notice the price dip and try to enter a market order, the cheap shares have been scooped up and price is back up to where previous limit sell orders were set. I have taked advantage of that with low limit buy orders. But you have to know that the stock is just at the bottom of its normal trading range, and not heading lower due to bad news, institutions dumping it, or the general markets. |
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