At the Lowest Possible Price

What Does "At the Lowest Possible Price" Mean?

The phrase "at the lowest conceivable price" is a guidance that goes with a buy order for stocks or other investment securities. It teaches a brokerage to create the purchase for the smallest amount that can be found on the market.

This type of trading assignment doesn't determine a maximum or least price at which the order must be filled. Rather, it just educates the broker to secure the lowest conceivable price for the security and to do as such as fast as could really be expected.

Grasping "At the Lowest Possible Price"

At the Lowest Possible Price requests are all the more commonly found in markets with limited liquidity or low trading volumes, or among traders of firms with tiny market capitalizations. This is on the grounds that investors trading illiquid securities have less options with regards to executing a buy or sell order. The market for a thinly traded security is more limited and different gatherings are better able to demand pricing that may not be great for the investor.

For instance, investors hoping to trade currency options in exotic currencies (i.e., currencies other than the dollar, euro, pound, or yen) frequently use At the Lowest Possible Price.

While investing in securities in limited markets might bring an investor a higher rate of return than investments made in additional developed and liquid markets, the investor risks not having the option to enter or exit the market rapidly. In these conditions, investors frequently really like to purchase securities at the lowest conceivable price since it gives the best opportunity to profit while shortening their risk.

Of course, even however the investor might need to pay the bare least when executing a buy order, it is conceivable that they should acknowledge a higher price. In any case, utilizing an At the Lowest Possible Price request guarantees that the investor gets a low price, even in the event that it isn't generally so low as they wanted.

Something contrary to At the Lowest Possible Price would be a request to execute the order "at the market" — that is, buy at the current price of that security, no matter what. At the market is the most essential and common kind of buy order: the default position, as it were.

Special Considerations

At the Lowest Possible Price requests go with market orders. Market orders are transactions that include buying or selling a security right away. They guarantee that the order will be executed, yet don't guarantee the execution price. Frequently the transaction goes through at the current market price of the security. At the Lowest Possible Price, on the off chance that it's joined to the order, is a request, yet not a command.

Investors who really do need all the more a guarantee on the security's price, further diminishing their risk of paying too a lot, can utilize a limit order. Limit orders are orders to buy or sell a security at a specific price or better. A buy limit order must be executed at the limit price or lower, and a sell limit order must be executed at the limit price or higher. Placing in a buy limit order would allow the investor to determine a maximum, or limit, to the price they pay. In any case, not at all like with market orders — which go through regardless — the buy-limit order won't be executed except if the asking price is at or below the predetermined limit.

Different kinds of limit orders include:

• A stop order, also known as a stop-loss order, is an order to buy or sell a stock once the price of the stock arrives at the predefined price, known as the stop price. At the point when the stop price is reached, a stop order turns into a market order.
• A stop-limit order is a variation on the abovementioned. It requires the setting of two price points: the beginning of the predetermined target price for the trade and the outside of the price target for the trade. A time period must likewise be set. The stop-limit order will be executed at a predefined price, or better, after a given stop price has been reached. When the stop price is reached, the stop-limit order turns into a limit order to buy or sell at the limit price or better
• A buy-stop order is placed at a stop price over the current market price. Investors generally utilize a buy stop order to limit a loss or safeguard a profit on a stock that they have sold short. A sell stop order is placed at a stop price below the current market price. Investors generally utilize a sell-stop order to limit a loss or safeguard a profit on a stock they own.

Features

• At the Lowest Possible Price is a guidance that goes with a buy order for securities.
• This type of assignment is most commonly utilized in moderately illiquid markets, like certain derivative markets, or among traders of firms with tiny market capitalizations.
• It trains the broker executing the trade to look for the lowest price feasible for the security.