Good morning, and happy Monday everyone!
First things first, THANK YOU ALL! We surpassed 1,000 subscribers last week, and I can’t thank you all enough!
In this week’s edition of Matt’s Money Manifesto, we’ll be diving into the different ways to buy stocks. Every time you buy or sell a stock or ETF, you’ll see different options including:
1. Market Orders
2. Limit Orders
3. Good Till Cancelled/Good Till Day
So, let’s break down all 3!
Market Orders
Market orders are the most basic way to buy/sell a stock. Here’s how they work:
When you place a market order, you are agreeing to buy/sell the stock at whatever the price is at that exact second. There is no way to choose the price in market orders.
This method requires the least amount of thinking and knowledge and is the simplest way to go about buying or selling stocks.
Limit Orders
Limit orders are a bit more complex, and here’s how they work.
When it comes to limit orders, you are the one who picks the price you want to buy or sell the stock at.
BUT, that does NOT mean that you will automatically get the chance to buy or sell the stock at that price.
Here’s an example….
Let’s say you want to sell STOCK A at $100. Currently, the STOCK A is trading at $95. You can place a limit buy order at your chosen $100, but it will not go through until the price hits your $100 price.
So how long will the order remain open? Days? Weeks? Years?!
That’s where the next option comes into play!
Good Till Cancelled/Good Till Day
When you place a limit order, the last thing you want is for your order to remain open indefinitely. If this happens, you might accidentally find yourself buying a stock long into the future, or selling a stock you no longer want to.
You will have the option to select a Good Till option.
Good Till Cancelled means the order remains open until you cancel it. Pretty simple!
Good Till Day means the order will remain open for the remainder of the trading day (9:30 AM - 4:00 PM EST).
Depending on your specific situation, you may choose either of these options.
If you are POSITIVE you want to sell STOCK A when it reaches $100, you could choose Good Till Cancelled.
But, if you only want to sell STOCK A if it hits $100 today, then you could choose Good Till Day.
Let’s Summarize…
Market Order: Buy/sell at the CURRENT price
Limit Order: Choose the price to buy/sell (doesn’t mean it WILL happen…)
Good Till: Defines the timeframe your Limit Order will remain open for
Hopefully, this helps clarify the different ways to buy and sell stocks, and makes the process a little less confusing!
If you enjoyed it, give this article a like, and if you haven’t already, subscribe for weekly posts like this!
Cya next week!
- Matt
Hope you enjoyed! See you next week :)
Finally someone explained this!