Personal Finance & Money Asked by shwe on May 11, 2021
I was trying to buy ProShares Short Dow30 ETF (NYSE Arca: DOG). I put in a limit order at the ask price not the bid price since I want the order to execute all at once. The ask price is a penny more than bid price. So if the ask price is 26.11 and the bid price is 26.12, I would submit a limit order at 26.12. Normally, I would see such an order get executed right away. But for this stock, every time (I tried 3-4 times) I submit a limit order, the ask price and bid price goes up. My bid price becomes the ask price and the ask price becomes one penny more. I feel like someone is doing price matching or is hustling me to higher prices. Volume of ask size is big enough to fill my order right away but my order does not fill. What is going on?
I am trading with Fidelity. Every time I submit an order, the ask price goes up one penny so my order does not get executed. There is also an increase in bid size. When I cancel the order, the bid size decreases by the amount of my order plus some more. Then the ask price goes back down by a penny. I just want the order to execute right away so I am bidding at the ask price and the ask size is three times more than my order size so technically it should get executed right away. Anyway I waited to see what would happen. My order size is 40. The stock got traded at my bid price for many other orders but not my order. The bid size goes up and down to 40 which is my bid size. Then the other orders came in and size went up again and those got traded. I think my order is just sitting at the bottom and get executed only when no one really wants to pay the price I pay. So as soon as my shares got traded, the bid price went down by penny. So I think my trades are placed at the bottom of the queue and other trades are getting done on top of it.
The price is moving higher so by the time you enter your order and press buy, a new buyer has already come in at that time and taken out the lowest ask price. So you end up chasing the market as the prices keep moving higher.
The solution: if you really want to be sure that you buy it and don't want to keep chasing the market higher and higher, you should put in a market order instead of a limit order. With a market order you may pay a few cents higher than the last traded price but you will be sure to have your order filled. If you keep placing limit orders you may miss out altogether, especially if the price keeps moving higher and higher. In a fast moving market a market order is always best if your aim is to be certain to buy the stock.
Answered by Victor on May 11, 2021
An even better solution, one used by successful day traders is to use marketable limit orders. You don't place the limit at the ask where you may not get filled right away but a few cents above ask. This gives you a good chance of getting filled without too much risk. A market order carries a bigger risk. It's not terrible but once in a while you could get a big squeeze and a bad fill.
Answered by DISC-O on May 11, 2021
Get help from others!
Recent Answers
Recent Questions
© 2024 TransWikia.com. All rights reserved. Sites we Love: PCI Database, UKBizDB, Menu Kuliner, Sharing RPP