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Suppose you place a limit order to sell STCK for $x and I only execute it (giving you $x) if the price goes above $x+1. Someone's making $1 on that spread and i
by klipt 11y ago
Suppose you place a limit order to sell STCK for $x and I only execute it (giving you $x) if the price goes above $x+1. Someone's making $1 on that spread and it definitely isn't you.
- yummyfajitas 11y agoIf I accept a limit order from you to sell for $x and the price goes down to $x-1, someone lost $1 and it sure wasn't you. All you've discovered is that when you sell a stock, you lose both the upside and the downside.
- klipt 11y agoNo, the broker can just not execute the limit order. There's never downside for the market makers.
- yummyfajitas 11y agoYou are confusing "accept a limit order" with "purchasing a call option". Once you've accepted the order you are legally obligated to deliver in T+3 days. If you fail to deliver you pay big penalties, your broker shuts you down, all sorts of bad things.
- klipt 11y agoIn my experience with brokers like Schwab, placing a limit order is no guarantee of execution, even if the market price reaches the price specified in the limit order.
- tptacek 11y agoI think you're again confusing terminology; you're referring to placing an order, which is obviously no guarantee of execution, and Chris is referring to what happens after your order is executed.