What is the interest of any buyer (or seller) of shares to give a long-lasting buy (or sell) order?
I will give an example. Let's say I own shares, currently priced at $10, of a pharmaceutical startup that develop a new drug. I plan to sell some of those stocks in case the stock raises, for example above $12. I have two options:
- A long-lasting sell order at $12; but in that case I'm guaranteed to never sell above that price.
- To wait until the price goes up, and then at that point to give a sell order.
In the case of a positive, sudden and unexpected event (for example, a very promising result from a drug trial, public takeover, etc), the share price could boldly go up, for example up to $20. In option 1, I earn $12. In option 2, I earn $20. (This reasoning also work in reverse, with unexpected bad news.)
But as far as I can see, there are always many long-lasting orders in any stock exchange "waiting queue". I understand that the stock market mechanism rely on having an order queue to fix a price; but for me placing an order that will last more than a few minutes long does not really make sense, as you risk missing an important information in this time window.
So, what's the point, and who is doing this?