There are pros and cons to both.
A limit buy order will not go above a certain price, but there's no guarantee you'll fill the order. Set the limit too low, and you may not get anything.
A market order will go through, but there's no guarantee on price.
Let's consider two examples:
1. You want to buy an ETF that closed yesterday at 100€ Before the market opens you set a limit order for 105€. I make a market order. The market opens at a price of 105,50€ and the price just goes up from there, closing the day at 120€. Your limit order didn't go through and you miss out on that day's gains. Mine went through at 105.50€.
2. Same closing price yesterday, same orders. But this time the ETF opens at $120, drops back to $104 then closes at $105. My order would go through at the opening price, much higher than I expected. Yours wouldn't go through right away, but would fill around the time the ETF drops back around $105. We have the same shares now, but I paid more for them.
The higher the trading volume of the ETF and the lower the bid/ask spread, the more likely the difference will be insignificant.
If you're buying popular ETFs and plan to hold for the long term, either is probably fine.
It's worth pointing out that if you set your limit order close to the current price, it's extremely unlikely to not get filled.
I tend to set it just a few cents below the current price and it always gets filled within the day.
But I admit that in the long-term it probably doesn't matter. VWCE and similar ETFs aren't volatile and it's not like it will jump crazily in price and you'll get shafted.
Honestly, that will save you maybe a couple hundred Euro in the long-term. For me it's mostly so that I can fit as many shares as possible in my monthly sum.
As another commenter explained the difference, always place a limit order with the market price.
You will be safe from market fluctuations if any and you get to fulfill ur orders and don’t bother with saving some cents or even 1,2 euros. This doesn’t matter for the long run if u are after long term investments
Usually market for me but it depends on liquidity, on a very liquid asset you don’t get much slippage (the asset value between when you place the order and when the order goes through doesn’t change much), so I use market for these, for illiquid assets always use a limit order though
It depends on your investment style also, for long term buy and hold I wouldn’t care much if I bought it 10 cents higher or lower, but I would care if I do very short term trading, for example
There are pros and cons to both. A limit buy order will not go above a certain price, but there's no guarantee you'll fill the order. Set the limit too low, and you may not get anything. A market order will go through, but there's no guarantee on price. Let's consider two examples: 1. You want to buy an ETF that closed yesterday at 100€ Before the market opens you set a limit order for 105€. I make a market order. The market opens at a price of 105,50€ and the price just goes up from there, closing the day at 120€. Your limit order didn't go through and you miss out on that day's gains. Mine went through at 105.50€. 2. Same closing price yesterday, same orders. But this time the ETF opens at $120, drops back to $104 then closes at $105. My order would go through at the opening price, much higher than I expected. Yours wouldn't go through right away, but would fill around the time the ETF drops back around $105. We have the same shares now, but I paid more for them. The higher the trading volume of the ETF and the lower the bid/ask spread, the more likely the difference will be insignificant. If you're buying popular ETFs and plan to hold for the long term, either is probably fine.
It's worth pointing out that if you set your limit order close to the current price, it's extremely unlikely to not get filled. I tend to set it just a few cents below the current price and it always gets filled within the day. But I admit that in the long-term it probably doesn't matter. VWCE and similar ETFs aren't volatile and it's not like it will jump crazily in price and you'll get shafted.
Thank you! I will start using limit orders few cents below the current price, this was very useful!
Honestly, that will save you maybe a couple hundred Euro in the long-term. For me it's mostly so that I can fit as many shares as possible in my monthly sum.
Understood, thanks!
Thank you, this is extremely useful!
As another commenter explained the difference, always place a limit order with the market price. You will be safe from market fluctuations if any and you get to fulfill ur orders and don’t bother with saving some cents or even 1,2 euros. This doesn’t matter for the long run if u are after long term investments
Usually market for me but it depends on liquidity, on a very liquid asset you don’t get much slippage (the asset value between when you place the order and when the order goes through doesn’t change much), so I use market for these, for illiquid assets always use a limit order though It depends on your investment style also, for long term buy and hold I wouldn’t care much if I bought it 10 cents higher or lower, but I would care if I do very short term trading, for example