Limit sell order

Definition: An offer to sell one or more shares of a company’s stock but only for a certain minimum price.Example: Jamaal would like to sell 25 shares of TRS Industries. While the stock has risen to $73 per share, he would like it to rise just a little more so he can receive $75 for each share. Therefore, he offers to sell his 25 shares for $75 each. He is asking $75 per share.

Investeach explains: An offer to sell shares in this manner is accomplished through the entry of a sell limit order that can be done on line or over the phone with a stock brokerage firm. For a publicly-held company (ie: a company whose shares are available for purchase and sale by the broad investing public) of any reasonable size, there will be many of these sell limit orders existing at any one time. In order to make some sense of them, computers sort and display the orders from the lowest asking (aka offer) price to the highest:

Asking price  # of shares offered at this price

$ 25.00        200
$ 25.02        100
$ 25.05        300

The most important sell limit order is the one with the lowest price and it is known simply as “the ask”. This is because a person wanting to become an owner of the company’s stock right now – and who doesn’t have the luxury of specifying a maximum price that she will pay – will buy her shares from the seller asking the least amount per share. We say that she will pay *the ask*.

Riddle me this:

1. Is a person who enters an ask order wanting to buy stock in a company or sell stock in it?
2. What is the significance of the limit price a person sets on a sell order?
3. How are ask orders actually placed?
4. Of all the ask orders that exist at any one time, which one is the most important, and why?

2017-10-01T17:55:44+00:00