Can market orders execute at an absurd price?
Personal Finance & Money Asked by Kamaji on December 21, 2020
When I write limit orders for securities that have a low trading volume, I normally ping the brokerage API to see what the current ask price is. However, when I was looking at a specific stock I noticed that the ask price was insane!
So I was wondering, if I submitted a Market Order to buy 1 security and I had the available capital, would it execute at $199,999.99?
One Answer
When after hours orders first came out some did trade like that until broker-dealers fixed their systems. This is a dummy value designed to prevent an actual trade. The only firm where there would be risk is Berkshire Hathaway, which does trade in the $300,000 range. In fact, if you did place a limit order like that on a stock that trades after hours, your trade would be reversed if it went through, they would close your account and you would be banned from trading for market manipulation.
Most people wouldn't place an order for one share and most could not afford a 100 share order at that price per share. It is designed to prevent an automatic execution.
Correct answer by Dave Harris on December 21, 2020
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