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Sorting Box / Limit Orders: Stocks and Cryptos
« on: February 08, 2021, 06:41:49 AM »
This question has a few parts to it. It's related to the following experience:
Recently upon a surge in Dogecoin, I apparently misplaced a decimal place in a limit order. Doge was fluctuating between .04 and .05. I entered a limit order to sell for .004 (instead of .04) or greater. The order was then executed and the units of Doge all sold for .004. Needless to say, I sustained a loss.
I am told his is normal, that the broker "flipped the spread," and that this is common knowledge that this is how limit orders work or can work with crypto.
My questions:
1. Is this how limit orders always work? I thought the order was to sell at above (but not below) the specified price. When selling crypto, do all limit orders in fact sell at the limit itself if it is below the currently fluctuating price range?
2. If so, is this the same with stocks? If I enter a limit order to sell 1 share of stock x at 90/share but it's fluctuating between 100-110, it will execute at 90? And will it be bought by the broker itself to as was phrased "flip the spread?"
3. My thought in setting the limit below the fluctuating price was as a safety valve to sell above, but not below that price. Is this incorrect?
4. As this has said to be common knowledge among experienced traders, is it an acknowledged risk among all brokerages and all cryptos?
5. Is a market sell then the favored and safer sell option if one is trying to sell withing a currently fluctuating range? Or is there another option to mitigate the execution at a lower rate below a certain threshold?
Thanks.
Recently upon a surge in Dogecoin, I apparently misplaced a decimal place in a limit order. Doge was fluctuating between .04 and .05. I entered a limit order to sell for .004 (instead of .04) or greater. The order was then executed and the units of Doge all sold for .004. Needless to say, I sustained a loss.
I am told his is normal, that the broker "flipped the spread," and that this is common knowledge that this is how limit orders work or can work with crypto.
My questions:
1. Is this how limit orders always work? I thought the order was to sell at above (but not below) the specified price. When selling crypto, do all limit orders in fact sell at the limit itself if it is below the currently fluctuating price range?
2. If so, is this the same with stocks? If I enter a limit order to sell 1 share of stock x at 90/share but it's fluctuating between 100-110, it will execute at 90? And will it be bought by the broker itself to as was phrased "flip the spread?"
3. My thought in setting the limit below the fluctuating price was as a safety valve to sell above, but not below that price. Is this incorrect?
4. As this has said to be common knowledge among experienced traders, is it an acknowledged risk among all brokerages and all cryptos?
5. Is a market sell then the favored and safer sell option if one is trying to sell withing a currently fluctuating range? Or is there another option to mitigate the execution at a lower rate below a certain threshold?
Thanks.