HL buy limit

ElephantBoy57

When buying shares, I have always bought at the time I am online. Is it better and common to place an order to buy when the share drops to a certain price? Does this cost more in dealing charges?

Shares move around on a daily basis, it would be good if a deal was placed when the price is low.

Sorcerer2018

The dealing costs from HL remain the same no matter what the price. Also factor in Stamp Duty charges on some shares and PTM Levy if you buy over £10,000 worth. But yes if you can buy the shares for cheaper than you would normally, this is generally a good thing, however be careful to understand why the share price has dropped. You might not want to buy them after you work out why it dropped.

EdGasketTheSecond

No no, the OP was asking about placing a limit order to buy 'if' the price drops.

Answer: It should cost no more but you run the risk of not buying the shares at all if the buy price never drops to your limit or it does drop but the broker fails to act and the price moves up again; I have had the latter happen more than once!

Ceme3000

You're right ED. In fact I placed a limit order with HL yesterday for Carnival shares. They didn't quite get there and so far today they are up 8.5%.  C'est la vie. 

EdGasketTheSecond

Yeah I reckon if you've made your mind up about a trade then just do it; if a few pence on the price is putting you off, its probably the wrong trade to be doing in the first place. If you leave a limit on for more than a day then new news can come along that means you no longer want to do the original trade but you can find it has been executed. e.g. sell order on an oilie if it reaches x pence; then they make a big discovery and price doubles but you were sold out at or near your limit before you could cancel the order  <- been there, done that.

Sorcerer2018

Ahh totally missed the Limit Order bit :-)

ElephantBoy57

EdGasketTheSecond said:

Yeah I reckon if you've made your mind up about a trade then just do it; if a few pence on the price is putting you off, its probably the wrong trade to be doing in the first place. If you leave a limit on for more than a day then new news can come along that means you no longer want to do the original trade but you can find it has been executed. e.g. sell order on an oilie if it reaches x pence; then they make a big discovery and price doubles but you were sold out at or near your limit before you could cancel the order  <- been there, done that.

I see your point. I was going to buy Virgin Money yesterday @97.7 they went up to @108 today, then dropped back a little. Could quite easily drop back again before I was ready to sell.

I didn't buy them because my funds hadn't cleared until today

Thrugelmir

Limit orders can be placed for a longer period than just a day. If there's a price at which you consider the shares to be fair value. 

EdGasketTheSecond

Thrugelmir said:

Limit orders can be placed for a longer period than just a day. If there's a price at which you consider the shares to be fair value. 

Yes we know that but what I was saying is that if you put on a limit order for more than a day you are evaluating a future 'fair value' with only today's news. Some unexpected news can come out tomorrow that totally changes your idea of what 'fair value' is but because you left a limit order, it gets executed before you can adjust the limit to take account of the new information.

AnotherJoe

EdGasketTheSecond said:

Thrugelmir said:

Limit orders can be placed for a longer period than just a day. If there's a price at which you consider the shares to be fair value. 

Yes we know that but what I was saying is that if you put on a limit order for more than a day you are evaluating a future 'fair value' with only today's news. Some unexpected news can come out tomorrow that totally changes your idea of what 'fair value' is but because you left a limit order, it gets executed before you can adjust the limit to take account of the new information.

Indeed, and likely in the very worst circumstances.

Say you decide BP is worth £100 a share and they are currently £110.

You put a limit in at £99.

Then BP announce they are writing off umpty billion worth of stranded assets.

The price drops like a stone in five minutes and you catch it at £99 on its way to £75.

And of course, if the news is good but you were penny pinching, say £109.50 limit when its £110, and then the news says they discovered oil that can be extracted at £1 a barrel and the price jumps to £125, you just lost £15 a share compared to buying at £110 because isy not going back to £109.50 or £110 any time soon.

Apodemus

AnotherJoe said:

...And of course, if the news is good but you were penny pinching, say £109.50 limit when its £110, and then the news says they discovered oil that can be extracted at £1 a barrel and the price jumps to £125, you just lost £15 a share compared to buying at £110 because isy not going back to £109.50 or £110 any time soon.

Yes, that sounds like me when I was determined not to buy SMT above £4.00...still waiting!