Market Education — Order Entry Basics

• Bid: highest price buyers are currently willing to pay.
• Ask: lowest price sellers are currently willing to accept.
• Spread: ask − bid. Tighter (small) spreads generally indicate deeper liquidity; wider spreads indicate thinner liquidity and higher transaction cost to cross the market.
• When spreads are tight (e.g., $10.00 × $10.01): small price improvements usually fill quickly.
• When spreads are wide (e.g., $10.00 × $10.20): use patience and price control; market orders can pay unnecessary slippage.

• Limit buy: sets the max price you’ll pay. You can improve your odds of a quick fill by placing slightly above the current bid (e.g., bid $10.00, you post $10.01–$10.03 depending on spread/liquidity).
• Limit sell (for longs): sets the min price you’ll accept. Posting slightly below the current ask can bring liquidity to you without crossing the spread entirely.
• Short sells: similar idea—when initiating a short, you’re selling first. If the inside market is $10.00 × $10.01, a short-sell limit placed a touch below the ask (e.g., $10.00–$10.01) often gets a fill without blasting through levels.
• Staged improvements: if no fill, adjust in small increments toward the inside to discover where natural liquidity is, rather than jumping straight to a market order.
• Avoid chasing: in fast moves, reassess rather than repeatedly lifting/pressing the book, which compounds slippage.

Tight spread, seeking quick fill

• Inside market: $50.00 × $50.02 (spread $0.02).
• Buy 200 shares: post a limit buy at $50.01 (one cent above bid). You now join/beat the bid and often get hit by natural sellers without paying the full spread.
• If no fill after a short wait, improve to $50.02. You’re still using a limit and controlling worst-case price.
• Sell 200 shares (close a long): post a limit sell at $50.01 (one cent below ask) so buyers can lift you without you crossing the spread entirely.
• Initiate short 200: place a sell short limit around $50.01 (a touch below the ask). If liquidity is present, you’ll likely be taken without chasing.

Wide spread, prioritize price control

• Inside market: $50.00 × $50.20 (spread $0.20).
• Buy 200 shares: start with a limit buy at $50.03–$50.05 (small improvement). Give it time; widen/raise gradually if needed. Jumping straight to market risks paying the full $0.20.
• Short 200 shares: begin with a sell short limit a few cents below the ask (e.g., $50.15–$50.18) and let buyers come to you.
• Partial fills are normal. You can re-post the remainder at your price to avoid signaling urgency.

Examples are illustrative of order mechanics only. This is general, impersonal market education, not advice or a recommendation.

• Consider thinner liquidity windows: open/close, small caps, halts, or news can widen spreads.
• Post and wait: use a limit and give the market time; let opposing liquidity come to you.
• Use partial fills: many brokers support partial execution; that’s normal and can reduce footprint.
• Size accordingly: wider spreads imply larger effective costs; keep position sizing and risk in mind.

• Time-in-force: day vs. IOC/Fill-or-Kill changes behavior; IOC can reduce queue risk but may not fill fully.
• Venue behavior varies: fills can differ by broker/venue; historically, large-tick/odd-lots can behave differently.
• Record your fills: keeping a small log improves your sense of typical improvement/slippage for symbols you trade.

This section is general market education only—impersonal and not a recommendation or direction for any account.

• Expect wider spreads and uneven liquidity in the first minutes. Many traders avoid pure market orders right at 9:30 ET to prevent surprise prints.
• Use limits with intent: for urgent entry, consider limit IOC near the inside; for non-urgent entry, post and let the market trade to you.
• Scale size: start smaller, especially in names with low premarket volume or news. Add as liquidity normalizes.
• Auction awareness: primary exchanges run an opening auction; prints can differ from premarket quotes. Your broker’s docs will explain how to participate in opening auctions if supported.
• Checklist to research: symbol’s typical tick size/ATR, premarket volume, news/halts, and your broker’s order types (IOC/FOK/pegged/auction) and routing behavior.

These are general mechanics and hygiene practices, not advice. Always consult your broker’s documentation for supported order types and routing specifics.