what is a limit order?

[donmelo]

just a quick question for all what exactly is a limit order?  Also is it possible to set up triggers that will automatically process transactions at specific prices?

[Dzielak51]

What you put an order in, you select "Limit Order" to select a certain Price yo want to buy the stock at.  Whereas a market order is a trade and whatever the stock price is trading at.

You have to place "Limit Ordrers" for penny stocks.

[scott]

You have to place "Limit Orders" for penny stocks.

Unless you are selling that is....

And yes it is possible to set triggers to sell at a certain price etc...

[Dzielak51]

I dont know who you got but Scottrade does not allow to sell a penny stock with market order.

[scott]

I have TD Ameritrade

[jason22]

Didn't know you can sell a penny stock off the market, thought it had to be a limit

[donmelo]

Yeah I have ameritrade as well...

[Dr PennyStock]

Scott is right, TDAmeritrade let you sell penny stocks at the market. 

[rb122756]

When you are buying, a limit order is the most you are willing to pay for an equity.

For example, if a stock is trading at $ 1.70 and you put in a GTC (Good till cancel) limit order for 1000 shares at $ 1.60, if the stock hits $ 1.60 during the trading day your order will be filled.  Let's say the stock closes at $ 1.65 and the next day it gaps down to $ 1.40 at the open.  Your order will be filled at $ 1.40 because your 'limit order' of $ 1.60 says you are willing to buy the stock at $ 1.60 or less, but not any more than $ 1.60.

When you are selling, the limit order says I want at least this much money to sell the stock.  If the stock is trading at $ 1.50 and you place a GTC order of $ 1.60, if it hits $ 1.60 during the trading day your order will be filled.  If it closes at $ 1.55 and gaps up to $ 1.80 at the open of the next day, your order will be filled at $ 1.80 because your limit has been met or exceeded.

A tip for anyone trading options - Never use a market order to purchase an option.  The time value of the option can be manipulated by the market maker.  If the option is highly volatile and you try to purchase it using a market order, you could end up paying dollars more than you wanted to for the option.  This has happened to me personally.  Won't happen again.

It's okay to use a market order to sell if you are trying to dump a stock or option during a free fall to cut your losses.  That's the only time I would use one.