Quote:
Originally Posted by GregWeld
A few posts ago -- we discussed Limit orders - Stops etc.
So here's the key to this for Investing 102..... the .03 DIFFERENCE between the "bid" (me) and the ASK (seller) on 10,000 shares is a whopping $300 on a $85,000 purchase. Whoo hook.... that ought to make or break a profit on this investment shouldn't it? 
But -- if I was a trader? That $300 saved - in multiple trades per day -- over the course of a month or a year - would be huge!
I did it because I don't want to pay "up" on a down market day. If I used it in a rising market -- I might not get the shares -- because I was being "cheap" -- and then they might have risen .50 a share after lunch! I'd have missed out on that move. So it is - like all things - subjective and it all "depends". |
This is one area that I struggled with for a while - both on the buying and selling side - and a lot of the time it was simply an "emotional" misjudgement (that more often then not caused more disappointment than it avoided). It's especially true when looking at higher valued stocks. Somehow our brains focus on the two digits after the decimal and we (I) sometimes miss the big picture. You hate to miss an opportunity to buy or sell (something that you want to) over a couple of pennies. It's obviously different if you have your mind made on a value or if you're on the fence about something. Especially if you are following Professor Weld's "don't be a trader, be an invester" strategy.