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.