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I never really thought about it like that, but it makes sense. I’ve always been more of a long term dividend investor so micromanaging my trades isn’t somethin
by brightball 6y ago
I never really thought about it like that, but it makes sense.
I’ve always been more of a long term dividend investor so micromanaging my trades isn’t something that I tend to spend much time worrying about. If it’s a good investment, it’s a good investment.
- JKCalhoun 6y agoYeah, I buy and hold and I don't see a significant difference between a few cents with a market vs. a limit order.
- kasey_junk 6y agoLimit orders are a risk management technique. Your limit order will not fill if you can’t get the price you want. A market order is subject to microstructure fluctuations such as flash crashes. All things being equal if you don’t care much about execution costs limit orders that cross the market are what you want.
- JKCalhoun 6y agoI feel like the brokerage I was using would make the purchase at market close (Vanguard index funds). I assume at the market closing price? That gets rid of a flash crash danger anyway.
- kasey_junk 6y agoNot really. Exchanges have circuit breakers so the closing price. An frequently be the bottom or top of the market during extreme events.
- kaycebasques 6y agoIf you're buying something with low liquidity (e.g. an ETF with low AUM or a small-cap stock) the bid/ask spread can be huge. When I first started investing/speculating I made the mistake of putting in market orders without checking the spread. That resulted in me paying $1 or more per share above the last quoted market price. E.g. the last market quote was $65, but the going ask was $66. After-hours market orders (even on large-cap stocks or high AUM ETFs) can also cause some nasty surprises.