Limit Orders
We've talked about -- or discussed -- LIMIT ORDERS.
I've said that I use them -- but that if someone is buying 10 to 100 shares of something - then a few pennies one way or the other probably doesn't matter very much. Just do a market order. Get the shares bought - and sit back and start collecting the dividends. What can happen is if you get cute with a LIMIT ORDER, you might miss the fill by a penny... and it expires at the end of the business day... and you forget that it was a Limit Order so you think you now own the shares.. and the dividend goes EX and you miss that. So sometimes being cute doesn't work out all that well.
The reason I thought about this today - was that I had put in a limit order for JNK... this is a name I move in and out of frequently... (meaning maybe I'm in it for months... we're not talking about trading it hourly!). I figured that what was a good open this morning might fizzle out - like the market does many Fridays. Since we're getting near the end of the month - and JNK will go EX shortly -- I wanted to at least pick up this months dividend rather than sit in cash... AND I used a limit order because when I'm buying 20,000 shares of something -- a few pennies here and there add up. AND because I didn't want to pay market price in the morning - only to see the market go south in the afternoon selling.
I'm telling you all this because it's a THOUGHT PROCESS. The dividend is .20 for the month... why - when this is just a placeholder - should I pay UP .05 when I can use a limit order and PERHAPS buy them cheaper... which is the same as making money. That's the way I have to look at it. As it turns out - many of my names sold off in the afternoon - just as I had expected them too -- but, of course, JNK closed UP... and my order went unfilled.
I'm okay with this -- I'm on top of what I'm doing -- I will try again Monday (if it wasn't a holiday!) or Tuesday. I'm not as likely to forget what I'm doing with $800K as perhaps you might be with $1,000.... You're not active in the market daily, and you have a job to do, and kids at home, and blah blah blah. I have none of those distractions...
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