Relay-Version: version B 2.10 5/3/83; site utzoo.UUCP
Posting-Version: version B 2.10.1 6/24/83; site trwrba.UUCP
Path: utzoo!watmath!clyde!burl!ulysses!mhuxr!mhuxb!mhuxn!mhuxm!mhuxj!houxm!vax135!cornell!uw-beaver!tektronix!decvax!ittvax!dcdwest!sdcsvax!sdcrdcf!trwrb!trwrba!suhre
From: suhre@trwrba.UUCP (Maurice E. Suhre)
Newsgroups: net.invest
Subject: Re: Limit Orders
Message-ID: <1274@trwrba.UUCP>
Date: Thu, 7-Feb-85 17:54:15 EST
Article-I.D.: trwrba.1274
Posted: Thu Feb  7 17:54:15 1985
Date-Received: Wed, 13-Feb-85 02:38:57 EST
References: <3754@ucla-cs.ARPA>
Organization: TRW EDS, Redondo Beach, CA
Lines: 34

I understand limit orders on the sell side to mean that when
the limit (i.e. stop) price is reached, the order becomes a 
*market* order.  The stock may fall farther before the buyers
finally catch up with the sellers.  That is, your order may
actually be executed *below* your stop loss price.

Those who believe that the specialist system is rigged in favor
of the specialists (they are either paranoid, cynical, or accurate)
suggest that limit orders tell the specialist where the gold is
buried.

On the other hand, if you are trying to pick up a stock or option
a little cheaper than the usual trading range, you have a chance at 
it by entering a limit order.  I would suggest that these be either
day trades (good only for the current day) or else you monitor them
closely.

The specialist does not collect a fee for each transaction, but rather
makes his money on the spread between the bid and asked prices.

Finally, the use of limits on odd lot trades is different.  When a
round lot trades at the limit price, the odd lot broker is required
to execute all odd lot limit trades waiting at the same price.
Don't forget that the odd lot broker gets 1/8 for his troubles.
And you generally pay a higher comission for odd lots.

All in all, this mess is not a simple matter!

(Usual disclaimers about not being a registered investment adviser,
etc.)

Maurice

{decvax,sdcrdcf,hplabs,ucbvax}!trwrb!suhre