October 25th, 2009 by 
Every so often I receive questions about using a “Buy Limit Order”. Beginning stock traders want to learn about different order types, which I think is great.
Wanting to learn now, is a lot better than thinking you know everything and in this case, using Market Orders all the time.
That is, until you have an order filled much further away from the then current trading price and lose a lot of money.
That’s when you may come to realize (hopefully) that there are other options available.
Personally, I use a “Buy Limit Order” on all of my trades. It comes natural to me now and I don’t even think about it. In my view, the only advantage of using a Market Order – that being the opportunity to get filled immediately, is not worth the risk of getting an adverse fill. Besides that, I don’t usually trade low volume stocks, so I can get filled immediately anyway using a “Buy Limit Order”, without the risk.
I just added a full page article under my Stock Trading Risk Management section titled: Buy Limit Order – Stock Trading Order Types. I go into more detail in this article and provide some examples of how this type of order can help minimize the downfalls as compared to using a Market Order.
