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"Many preferreds are thinly traded. Limit orders are recommended. Market orders can be disaster. Market maker can make whatever price he chooses for your trade.


I strongly disagree.

To date, I've bought a hundred or so preferreds, most of them very thinly traded. Maybe half the time I use market orders, because a penny or two either way won't matter, and I need to get the execution done, because I've got another dozen positions I want to put on. E.g., today I did 35 buys, though a typical day is closer to five or ten. I'm executing mainly through Schwab, Firstrade, and TD and always getting very fair fills.

Yes, there are times when limit orders should be used, and that has nothing to do with how thin the trading volume is but --as you implied-- with how wide the spread is, which is easy to see before the order is written. But even then, market orders often get a better execution than trying to be too clever by half with limit orders.

I don't remember the ticker, but the bid x ask was something like 20.10 x 20.20, which invites using a limit order and splitting the spread. So that's how I wrote it. NO FILL. So I rewrote to 20.16. NO FILL. I went to 20.17. NO FILL. Disgusted, I rewrote as 'market' and got a fill at 20.15. And this isn't the only time that's happened.

Why? I have no idea. But I do maybe 500 trades a year, and nearly always regret not using a market order from the getgo *if* the spread isn't abusively wide *and* the order queue is tight. But, also, I'm trading off of a 1-minute chart, so I have a pretty good sense of where the market is and a what a fair fill should be when I'm submitting orders.

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