Part 7: Limit Order

Welcome back, Apricot Investors! In the last few weeks, we’ve explored different seeds (stocks, ETFs, bonds) you can plant in your financial garden. Today, let’s talk about one of the ways to buy those seeds: the limit orders.

Limit Orders: The Flexibility of Setting Your Price

Imagine you’re at the farmers’ market, eyeing a basket of juicy apricots. As a seasoned gardener, you know they’re worth 500 AMD per kilo, but the seller is asking for 900 AMD. You could bargain, or you could place a limit order – telling the seller, “I’ll buy a kilo if you’re willing to sell for 500 AMD.” That’s a limit order in a nutshell.

In the stock market, a limit order is an instruction to buy or sell a specific number of shares at a price you set. If the market price reaches your limit, your order gets filled. If not, it remains pending.

More About Limit Orders

• Control and Risk: You decide what price you’re willing to pay or accept, but there’s no guarantee your order will get filled. If the market never reaches your limit price, your order won’t execute.
• Risk Management: Limit orders aren’t just for buying; they’re also a powerful tool for protecting your investments when the market takes a downturn. You can set a “stop-loss” limit order, which instructs your broker to sell your shares automatically if the price falls to a certain level. This acts like a safety net, helping to limit your losses if things don’t go as planned.

Think of It As…

Setting a budget at the farmers’ market. You wouldn’t buy those apricots at any price, would you? A limit order is your way of saying, “This is my maximum buying price” or “This is the minimum I’ll sell for.”

Join us for Part 8 as we continue to explore the world of investing. Remember, knowledge is the best fertilizer for your financial garden!

Disclaimer: The examples in this text are for illustrative purposes only. This does not constitute investment advice or a recommendation to buy or sell any specific investment instrument.

Apricot Capital is regulated by the Central Bank of Armenia.