Foolish to place orders before the market opens?
If you are in it for the long run and are not worried about intra day fluctuations and buying within + or - 1% you would be better off going for a market order as this will make sure you buy it on the day.  If you use limit orders you risk missing out on the order if prices gap and start rising in the morning. Another option is to employ stop buy trigger orders (if offered by your broker). So you would have to sum up and decide which type of order would suit your strategy the best. Are you looking to buy the security because you are looking for long term growth and gains, or are you after getting the best price possible to help your short term gains? This would otherwise be a comment, but I wish to share an image. A stock I happened to own, gapped up on the open to $9.20 and slowly worked its way down to $8.19 where it closed up 6% but near its low for the day.  This is an addendum to my comment above, warning about buying a stock on the open when news is coming out. Or more important, to be mindful of that news and the impact it might have on the stock. In this case, when the news came out and the stock had closed at $7.73, one would need to decide if he wished to buy it at any cost, or place a limit order.  I've redacted the name of the company, as this discussion has nothing to do with any particular stock, I'm just offering an example of the effect I warned about, three weeks ago. (Full disclosure, I got out at $8.70 in the first minutes of trading.) Depending on your strategy, it could be though there is also something to be said for what kind of order are you placing: Market, limit or otherwise? Something else to consider is whether or not there is some major news that could cause the stock/ETF to gap at the open.  For example, if a company announces strong earnings then it is possible for the stock to open higher than it did the previous day and so a market order may not to take into account that the stock may jump a bit compared to the previous close.  Limit orders can be useful to put a cap on how much you'll pay for a stock though the key would be to factor this into your strategy of when do you buy. More on a technical note, but the spread on an ETF tends to be worst at market open and near market close. (assuming the ETF constituents are traded on a synchronous basis.) If possible, it's often best to let market makers get up and running before allowing your order to flow into market.
"I think for this a picture is worth a thousand words.  This is a ""depth chart"" that I pulled from google images, specifically because it doesn't name any security.  On the left you have all of the ""bids"" to buy this security, on the right you have the ""asks"" to sell the security.  In the middle you have the bid/ask spread, this is the space between the highest bid and the lowest ask.  As you can see you are free to place you order to the market to buy for 232, and someone else is free to place their order to the market to sell for 234.  When the bid and the ask match there's a transaction for the maximum number of available shares.  Alternatively, someone can place a market order to buy or sell and they'll just take the current market price. Retail investors don't really get access to this kind of chart from their brokers because for the most part the information isn't terribly relevant at the retail level." "First, as @littleadv mentions, and as I've pointed out before, anyone who participates in a market using limit orders (which, by the way, should be every non-professional investor) is by definition a market maker.  So, I will assume that your question pertains both to official market makers and to ""retail investors"" using limit orders. When you remark that there are such ""tight spreads"" in ""liquid assets"", what you are really saying is ""wow, look at all the market makers in these products!""  That's the benefit of electronic trading and algorithmic traders -- millions of participants each with their own opinion of the value of a financial instrument, trying to find people who have very specifically opposing opinions of the value of that same instrument.  This is called price discovery, and is the entire point of financial markets. So, you ask why are there all these market makers present to create such tight spreads in assets like SPY?  Answer: Because they can make money in these markets: Imagine (towards a contradiction) that market makers thought they couldn't make money by offering tight spreads in SPY, and so SPY had a wider spread than it actually does.  For example, say the highest bid for SPY was $99.98 and the lowest ask was $100.01.  Now imagine that a market maker with perfect knowledge of the future came along knowing that he would be able to sell SPY for $100.01 in 5 minutes.  Then he would load up as many buy orders as he could for $100.00 or lower.  (He wouldn't bid $100.01 or higher because those trades would not be profitable according to his information -- at least not 5 minutes from now.)  So the spread had previously been $0.03 and then suddenly it was $0.01, all because a market maker with better information came along and realized he could make money by creating a tighter market! Now, nobody has perfect knowledge of the future, which is why markets are never infinitely tight or infinitely liquid.  Each market maker has to weigh possible profits against the probability that those profits will actually turn into losses.  But if one market maker decides not to participate in a particular instrument, there's bound to be another market maker who will happily take his place.  So the very fact that there are so many market participants with resting buy/sell orders for SPY right now is proof that there are market makers able to make money doing so.  If they could not make money, they wouldn't be there, and the spread would be wider. 10-15 years ago, before electronic trading and algorithmic trading, the number of market participants was far lower, and the spreads were far wider, meaning retail investors like you and me had a much harder time making money.  The only people making money were the institutional investors, the brokers, and the exchanges.  Now that all these new millions of players are present in the market, retail investors like you and me get to participate and make money too." Firstly what are you trading that you could lose more than you put in? If you are simply trading stocks you will not lose more than you put in, unless you are trading on margin. A limit order is basically that, a limit on the maximum price you want your buy order bought at or the minimum price you want your sell order sold at. If you can't be glued to the screen all day when you place a limit order, and the market moves the opposite way, you may miss out on your order being executed. Even if you can be in front of the screen all day, you then have to decide if you want to chase the market of miss out on your purchase or sale. For example, if a stock is trading at $10.10 and you put a limit buy order to buy 1000 shares at or below $10.00 and the price keeps moving up to $10.20, then $10.30 and then $10.50, until it closes the day at $11.00. You then have the choice during the day to miss out on buying the shares or to increase your limit order in order to buy at a higher price. Sometime if the stock is not very liquid, i.e. it does not trade very often and has low volume, the price may hit $10.00 and you may only have part of your order executed, say 500 out of your 1000 shares were bought. This may mean that you may have to increase the price of your remaining order or be happy with only buying 500 shares instead of 1000. The same can happen when you are selling (but in reverse obviously). With market order, however, you are placing a buy order to buy at the next bid price in the depth or a sell order to sell at the next offer price in the depth. See the market depth table below:  Note that this price depth table is taken before market open so it seems that the stock is somewhat illiquid with a large gap between the first and second prices in the buyers (bid) prices. When the market opened this gap is closed, as WBC is a major Australian bank and is quite liquid. (the table is for demonstration purposes only). If we pretend that the market was currently open and saw the current market depth for WBC as above, you could decide to place a limit sell order to sell 1000 shares at say $29.91. You would sell 100 shares straight away but your remaining 900 sell order will remain at the top of the Sellers list. If other Buyers come in at $29.91 you may get your whole sale completed, however, if no other Buyers place orders above $29.80 and other Sellers come into the market with sell orders below $29.91, your remaining order may never be executed. If instead you placed a market sell order you would immediately sell 100 shares at $29.91 and the remaining 900 shares at $29.80. (so you would be $99 or just over 0.3% worse off than if you were able to sell the full 1000 shares at $29.91). The question is how low would you have had to lower your limit order price if the price for WBC kept on falling and you had to sell that day? There are risks with whichever type of order you use. You need to determine what the purpose of your order is. Is it to get in or out of the market as soon as possible with the possibility of giving a little bit back to the market? Or is it to get the price you want no matter how long it takes you? That is you are willing to miss out on buying the shares (can miss out on a good buy if the price keeps rising for weeks or months or even years) or you are willing to miss out on selling them right now and can wait for the price to come back up to the price you were willing to sell at (where you may miss out on selling the shares at a good price and they keep on falling and you give back all your profits and more). Just before the onset of the GFC I sold some shares (which I had bought a few years earlier at $3.40) through a market order for $5.96. It had traded just above $6 a few days earlier, but if instead of a market order I had placed a limit order to sell at $6.00 or more I would have missed out on the sale. The price never went back up  to $6 or above, and the following week it started dropping very quickly. It is now trading at about $1.30 and has never gone back above $2.00 (5.5 years later). So to me placing a limit order in this case was very risky. Unless you want to be a short term day trader, then it is not foolish to be an end of day trader. If you are looking to be a medium to long term trader/investor then it is quite acceptable to put orders in after market close. Some would say it is even less risky, because you are not watching the price fluctuate up and down and letting your emotions getting the best of you. As stock prices have declined, the net worth of people has come down. Imagine owning a million shares of a stock worth $100/share. This is worth $100,000,000. Now, if the stock is suddenly trading at $50/share then some would say you have lost $50,000,000. The value of the stock is less. The uncertainty is always there as there are differences between one day's close and another day's open possibly. The sale price is likely to be near the last trade is what is being used here. If you place a market order to sell your stock, the price may move between the time the order is placed and when it is filled. There are limit orders that could be used if you want to control the minimum price you get though you give up that the order has to be filled as otherwise people could try to sell shares for millions of dollars that wouldn't work out well. This is the exactly wrong thing to do especially in the age of algorithmic trading.  Consider this event from 2010:  Chart Source  Another similar event occurred in 2015 and there was also a currency flash crash in that year. As you can see the S&P 500 (and basically the entire market) dropped nearly 7% in a matter of minutes.  It regained most of that value within 15 minutes. If you are tempted to think that 7% isn't that big of a deal, you need to understand that specific securities will have a much bigger drop during such events.  For example the PowerShares S&P 500 Low Volatility ETF (SPLV) was down 45% at one point on Aug 24, 2015 but closed less than 6% down. Consider what effect a stop loss order would have on your portfolio in that circumstance.  You would not be able to react fast enough to buy at the bottom.  The advantage of long-term investing is that you are immune to such aberrations. Additionally, as asked by others, what do you do once you've pulled out your money.  Do you wait for a big jump in the market and hop back in?  The risk here is that you are on the sidelines for the gains.  By missing out on just a small number of big days, you can really hurt your long-term returns. This all happens at once and quickly. Not in order.  So the HFT floods the exchange with orders. This is independent of anything. They would be doing this no matter what. Simply in anticipation of finding someone who will want what they're trying to buy.   They then notice someone wants what they have a buy order for. They, at the same time, cancel all orders that don't fit this criteria. At the same time, they're testing this guy to see what his price is. So while they're testing this guy they're cancelling all orders that are above his strike price for that stock. They let the right order go through, for a lower price. If they can't get a lower price, they just forget it. However, they probably can because they were in line first. They're buying before this guy and AFTER they know what he wants to pay.    Then, they sell it to him. The options market requires much more attention to avoid the situation you're describing. An overnight $10 ask will remain on the books most likely as Good-Til-Canceled.  The first to bid the low order gets it.  If traders are paying attention, which they probably are then they will bid at $10.  If not, they will bid immediately at $20. If they crossed the order, it would be filled at their higher than $10 bid. This is all governed by the exchange where the ask is posted, and most implement price-time priority.