What is the limit price?
Purchase and sale of shares is a respected form of gambling, many people think. You never really know if the hot supply you are buying will go up or down. You can be reasonably sure about the price of stocks based on market indicators or in some cases inside knowledge. In fact, a large number of people buy supplies knowing full of well that happens in the short term. However, long -term behavior is much more difficult to predict. For example, you can reach $ 50 per share, which is all you want to spend on some stocks. Once you decide not to buy if the shares pass over $ 50, then you set $ 50 for this stock. Especially if you have a limited amount of money to spend, setting the marginal price is a good idea.
However, the limited price is not just for you. Most importantly, for Tbroker or a person who buys shares for you. Once this person knows your marginal price, he is obliged to honor your wishes and do not buy if stockEdged your marginal price.
It also works in the opposite direction. You may decide not to buy shares if the stock price falls below a certain level. Some stocks are not worth buying when the price drops too low. Such eventuality could occur after some particularly bad news for society.
It's not just a purchase. Limited price may also be useful for sale of shares. You seller can set a price for which you do not want to sell. If you have a hot supply that is growing in reports on good yields and profits, you probably don't want to sell this event. You may decide that $ 80 is your marginal price. Once the stock price reaches $ 80, you hold it.
You can also because of any reason to make a marginal price under which you would not sell. Some supplies on the way down suddenly become attractive to negotiation hunters. Stocks that are usually traded between $ 20 and $ 40, but at once withThey trade for $ 6, someone who wants to profit quickly can jump. In this scenario you could set your limit price to $ 10. You can make calculations to find out how much money you are willing to lose and set your marginal price accordingly.