Limit orders are pretty cool and all, but why would someone make a more complicated investment? 🤔
Although limit orders do not reduce all risk, they give investors more control ⚖️
This is because investors can avoid spending money if the desired conditions never happen 🛑
Investors use limit orders to try to protect themselves from losses and to try to secure profits 🏦
Let’s say you are thinking about buying some Apple stock since they are releasing a new product 🍎
But you aren’t sure if you want to commit 🤔
In this example, let’s say the current price of Apple is $100.
We’d create a limit order to only buy $10 more of Apple if the price reaches $110 soon 🚀
If Apple reaches our limit price of $110, then our order of $10 will go through 🥳
If not, the order will cancel and your $10 will be back in buying power to spend on something else 😎
The same is true vice versa ⚖️ If investors are thinking about selling a stock, but aren’t totally committed, they can create a limit price for selling 🛍️
So, let’s say you want to sell all of your stock if Apple becomes less than $90/share 📉
With our Apple example, this limit order could help you protect yourself if the price goes down a lot 🛍️
So, now you know that investors use limit orders for more control, securing profits and reducing losses 🧠
