Retirement & Financial Planning Report

When you buy or sell stocks through a broker, there are two types of orders you can place: A “market” order obligates you to buy or sell at the current trading price. A “limit” order puts a cap or a floor on your trading price. Savvy investors may prefer to use limit orders. Suppose, for example, you like a company’s prospects but you think the current $100 trading price is too high. You could enter a limit order at, say, $90 or $80. If the stock falls to that price, you’ll buy it. Thus, if you can be patient, a limit order may allow you to purchase that stock at a favorable price.