Why does Fidelity warn me when I enter a buy limit higher than the closing price?

[UpQuark]

I want to buy some SCHD and I went to enter a buy limit order for it. I used a price a little higher than the price it closed at because I have no idea what direction the market will go Tuesday morning, and Fidelity gave me a message (I think informational type) that said I'd entered a price higher than the closing price.

Does getting that message mean that Fidelity thinks a person wouldn't intentionally do that? Won't a buy limit order be filled at a lower price if one is available?

 

[MC Rider]

Won't a buy limit order be filled at a lower price if one is available?

Ask them.

Pretty sure they will say they are not strangers and not only there, to do you harm.
Good Dio song though.

 

[TheWizard]

A limit order to buy an ETF is usually made with a limit price lower than the current price.
If you don't care about the price, then just use a market order...

 

[TheWizard]

And yes, if the opening price of an ETF is lower than your limit order price, then your order will execute at the lower price...

 

[euro]

Probably just a warning to make sure it isn't a typo since it is a somewhat unusual order.

 

[jim584672]

Sanity check, most limits are under the market.

 

[indiajust]

schwab does the same thing with limit orders. if you enter a price that guarantees execution, they remind you in the order comments before you commit. I have gotten used to seeing the range of warnings about low volume, volatile prices, etc. Slows things down.

 

[ut2sua]

I want to buy some SCHD and I went to enter a buy limit order for it. I used a price a little higher than the price it closed at because I have no idea what direction the market will go Tuesday morning, and Fidelity gave me a message (I think informational type) that said I'd entered a price higher than the closing price.

Does getting that message mean that Fidelity thinks a person wouldn't intentionally do that? Won't a buy limit order be filled at a lower price if one is available?

I think it is just a friendly warning (so you won't sue them later) in case you made a typo in the numbers. They gave me the lower price (than my higher order limit price) sometimes. I think a higher limit order is still safer than a market order in case the market sometimes shot up (seems to happen occasionally at end of trading sessions)

 

[GaryInCO]

I agree with the posts above -- "usually" limit buy orders are placed below the market. You're trying to get a better price.

But I just placed a limit above the market last week. It was a volatile stock, I was placing the order after market close on Friday, and I had no idea what would happen to the price over the weekend. So I entered a limit slightly above the closing price. That way if the price went sideways or down, I would (and did) get filled at the best price. But if something blew up over the weekend, I was protected from a crazy-high fill.

 

[SunGuy]

Others have said it too, but I do this myself too, with volatile stocks I want a set price, and if it is low volume, I will plan out how many shares I want and then the limit price is how I allocate the funds between them.

I like to buy low volume high insider ownership stocks that are suffering from temporary problems that are near their 52 week lows for long term buys in my Roth IRA.

So if I want to buy 10 shares, but pay no more than $14.50, sometimes the bid/ask is wide, and I want to plan out multiple stocks and be able to cover the cost once each of them execute.

But yeah, most people do it to set a price below the current price, and then set it GTC (good until canceled) to give them 180 days for it to reach that point.