It's basically another term for a limit order when buying or selling securities. Example: You want to sell 1,000 shares of Colonel Electric (The General got demoted after it cut its dividends).
The shares have been trading wildly between $15 and $25 a share. You don’t want to feel like a moron for having sold them at $15, when six weeks later they kiss $25. With tongue.
So what do you do? You put in a LIMIT ORDER.
That is, you put a limit of a minimum price of $25/share (AT THAT LIMIT) for Colonel Electric, such that those shares will simply sit in your account, maybe forever…until somebody out in the wild blue yonder of Stockland is willing to pay AT LIMIT $25 or more for the shares where you have put a minimum price limit of $25/share in your order.
So here’s to hoping they sell, and don’t get further demoted. Sergeant Electric is just a place you don’t want to go.
Related or Semi-related Video
Finance: What are Limit Order, Sell Limi...4 Views
Finance a la shmoop what is a limit order? you want to sell a thousand shares
of Colonel electric it was demoted after they cut their dividend the shares have [Scissors cuts dividend in half]
been trading wildly between $15 and $25 a share you don't want to feel like a
moron for having sold them at fifteen bucks when six weeks later they kissed
25 with tongue so what do you do well you put in a limit order that is you put
a limit of a minimum price of 25 bucks a share for Colonel Electric such that [Pile of stocks appear]
those shares will simply sit in your account unsold maybe forever until
somebody out in the wild blue yonder of Stockland is willing to pay twenty five [Woman standing at a colonel electric stand]
dollars or more for the shares where you have a minimum price limit of 25 bucks a
share in your order so here's to hoping they sell and don't get further demoted [Man carries stock into car]
Sargent Electric is just a place you don't want to go
Up Next
What is the Historical Trading Range? The historical trading range is just the collection of prices a security has been trading at since its IPO in...
Trading volume is the number of shares trading back and forth at a given time.
A takedown is a commission or spread that investment bankers take from the proceeds raised on a securities offering.
The term "oversubscribed" typically refers to a hot IPO; it describes a security offering with an incredible or unexpected volume of investing acti...