Jim Cramer, stock market guru and host of the hugely popular CNBC daily investment program, “Mad Money” when responding to the question of a caller to his show recently put it succinctly when he said, “I really can’t think of a reason when you wouldn’t use a limit order.”
Buy Limit Order Defined
A buy limit order is an order to buy shares of stock at a set or better price. A brokerage order to buy stock placed without conditions, is a termed a market order. Market orders are filled at the market (current) price in effect at the time the order is executed.
Especially when the price of a stock is volatile and the price is moving up and down quickly, using market orders may result in an investor buying a stock during a spike in price only to realize an immediate loss when the price later settles lower. Wise investors never trade at market but use buy limit orders instead.
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