Question
Your friend Reginald is considering buying shares in Kodak. He describes his order submission strategy as follows: The current bid is $8.41, and the current
Your friend Reginald is considering buying shares in Kodak. He describes his order submission strategy as follows: "The current bid is $8.41, and the current ask is $8.47. My plan is to put in a limit buy order at $7. I think the stock is okay at its current price, but I'm not wild about it. My order probably won't execute, but if it does, I'll have purchased the stock at a bargain price - $7 instead of $8.47. And if it doesn't, well I haven't lost anything".
Explain whether you think this is a good trading plan. If it is, explain why. If not, explain what the problem is, and what alternative strategy he could use if he is able to set up alerts on his phone to tell him if a specific price level has been reached.
I've been trying to answer this practice question but I don't think I'm getting it right
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