Buying stock at ask price via limit order?

Question

Let's say I'm entering my order online via TD-Ameritrade. It's 9:35am... a usually heavy volume period of the day. I get a current quote on Stock XYZ and it has a ask price of $22.50... I immediately send a rapid limit order through for 1,000 shares of the stock with a $22.50 limit on price. Here's my questions:

a) Will the online broker automatically buy the stock for less than $22.50 if a lower price becomes available?

b) Can you normally send your limit order through at the ask price and have it filled right then? Or should one set a limit price somewhere around $22.52 to give enough leeway? Thanks.

Answer 1

a) Answer: I think it depends on the broker. I know Fidelity will fill at a lower price if it's available, because they've done that on some of my trades. I used to use Ameritrade, and I think they worked the same way.

b) Normally, yes, but if the stock is both extremely volatile and trading at very high volume it's possible that the ask might have already passed your limit price by the time your order gets through.

Unsolicited advice: If you really the want the stock, don't quibble over pennies, just use a market order (unless you're daytrading, which is a whole 'nother kettle of fish).

Answer 2

It doesn't matter whether you enter on-line or by telephone all orders are routed the same, on-line orders have a few more edits, but they all get where they are suppose to go,

If the market changes, you order could be executed at a lower price if the market is dropping, if not, your order may  become the next bid price if the market is dropping.

Try the limit price at the current offering if you want the stock bad enough, OR you could try to put a bid in a little higher than the current bid, thus is becomes your bid, maybe some one will reach down and sell it.

If you're a trader, you never chase a price, put the order in at the price you're comfortable with and see what happens but DON'T CHASE

Answer 3

the ask price is higher than the price of the stock.  it represents what people WANT to sell for, not what they're actually willing to sell for.

typically, in a market like this, i would put in an order for no more than the bid price, which represents what people WANT to buy for, but is lower than what they're willing to pay.

if you're just going to put in an order for the ask price, then there's no point in using a limit order, anyway.

but yes, the broker will execute a limit order once the security crosses the threshold that you specify.  this could mean that you get it for that price, for a better price, or sometimes even for a slightly worse price if the volume is big enough and the stock is moving.

Answer 4

1st question.  It will be executed at a lower price if it is available.

2nd question.  No, it may not get executed.  The prices are continually changing especially if it is a bull market open. It may not even get executed at 22.52.  Even worse however is when you enter the order for 1000 shares and only 10 shares get executed.  That can be a real bummer.  If you want the stock you need to enter a market order.  If you do not care, enter the order at 22.25 and wait for the initial feeding frenzy to die down.