Author

Topic: The purpose of buy/sell orders (Read 916 times)

legendary
Activity: 1596
Merit: 1012
Democracy is vulnerable to a 51% attack.
July 25, 2011, 10:07:30 PM
#5
So might be a bit of a noob question but Im wondering - whats the purpose of placing a buy or sell order in advance? (or a sell order).

For example: the price is at say $14. You place a sell order @ $14.50. But why do this if you think maybe the price is going to jump to $15? This will only mean you have to buy back at a higher price if the price doesnt fall back below $14.50 right? Why not hold your $$ and wait for the price to hit $15, then sell when you get an indicator is going to drop again?? IMO it could go higher = more profit when you sell??
What if the price goes up to $14.60 and then starts dropping? Do you want to have to race to get a sell order in at 14.50 or more? What if it goes up to $14.50 and fills someone else's order since you didn't place one?

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I'm wondering if the reasoning here is that the price may go to $15 but will then fall back to say $14.30 (at least temporarily) so you can then buy back @ $14.30 and watch the price jump back to $15 - is this the logic behind this?
It may never go to $15. And your shares cannot possibly sell if they're not being offered for sale. And even if the price does go to $15, there still may be nobody willing to buy at that price by the time you place your shares for sale.

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Same with placing a buy order below the current price. Why not buy at the current price if you think the price is going to go up?
Presumably, if you're placing a buy order, you think the price will likely go up if it first gets as low as your buy price.
legendary
Activity: 1022
Merit: 1001
July 25, 2011, 10:04:16 PM
#4


Why not buy tomatoes at the current price?  Because even if the price is going to go up in the long term, in the short term the price is likely to fluctuate, and if you're patient, you can probably buy them cheaper on sale.

Same with bitcoins, if you're not in a hurry to buy, you may be able to buy them cheaper from someone who is in a hurry to sell.


Ah ok, kinda makes some sense. Cheers
newbie
Activity: 18
Merit: 0
July 25, 2011, 09:52:32 PM
#3
Why not buy at the current price if you think the price is going to go up?

Why not buy tomatoes at the current price?  Because even if the price is going to go up in the long term, in the short term the price is likely to fluctuate, and if you're patient, you can probably buy them cheaper on sale.

Same with bitcoins, if you're not in a hurry to buy, you may be able to buy them cheaper from someone who is in a hurry to sell.
hero member
Activity: 566
Merit: 500
July 25, 2011, 01:41:35 PM
#2
from what I understand, the general idea is that you dont actually know where the market is going to go, so you cover a few points where you think it could go without placing all your eggs in one basket.
legendary
Activity: 1022
Merit: 1001
July 25, 2011, 01:23:37 PM
#1
So might be a bit of a noob question but Im wondering - whats the purpose of placing a buy or sell order in advance? (or a sell order).

For example: the price is at say $14. You place a sell order @ $14.50. But why do this if you think maybe the price is going to jump to $15? This will only mean you have to buy back at a higher price if the price doesnt fall back below $14.50 right? Why not hold your $$ and wait for the price to hit $15, then sell when you get an indicator is going to drop again?? IMO it could go higher = more profit when you sell??

I'm wondering if the reasoning here is that the price may go to $15 but will then fall back to say $14.30 (at least temporarily) so you can then buy back @ $14.30 and watch the price jump back to $15 - is this the logic behind this?

Same with placing a buy order below the current price. Why not buy at the current price if you think the price is going to go up?

Cheers

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