buying treasuries

[Lonestar]

I'm in the process of building a treasury bond ladder in my VP using Fidelity's bond desk.  Because of the small bid/ask spread in shorter term treasuries I've always just put my order in as a "market order".  Should I be entering these as a "limit order"?  Is there a remote possibility in treasuries that someone could put in a bizarre ask offer and I could fill it with my market order? 

[Gumby]

Just realized that we haven't been talking about monetary investments very much over the past few days. That must be a good thing

The Secondary Treasury Bond Market is probably the world's most liquid market. So, there really isn't much concern for placing market orders. It takes a pretty big event to move Treasuries more than a percentage point during the time you are placing a trade. Most often the biggest instantaneous moves in the Treasury market come when Treasury Bond auctions are held (typically around 1PM on a published schedule).

Generally you are fine with a market order, but it never hurts to place a limit order if you want to control the exact amount of money going into Treasuries. Of course, you run the risk of missing the trade with a limit order (they give your order a low priority when you use a limit order), so you have to play it by ear. But, I've made plenty of market order Treasury trades with no problem.

If you just want to get it done, and not play games, just place a market order. It's unlikely that the price would move that much.

[Lonestar]

Well, that's the attitude I've always taken in buying treasuries.  I just want to get it done.  It was my intent to buy at the current price regardless.  I guess my question stems from lack of knowledge of market trading, maybe relating more to equities than bonds.

I can't imagine a sell order (for treasuries) floating around out there at some ridiculous price, but just maybe someone has placed it.  What if my market buy order got matched up with it. 

[MediumTex]

The Treasury market is probably the safest market in which to use market orders, just because it's so liquid, but I suppose something bad always could happen.

I wouldn't worry about it, though.  I would just use a market order.

If you do use a limit order, it will be filled instantly if the limit price is at or above the current ask.  No need to wait for some shares to come onto the market.

[Lone Wolf]

Sure, the market order is just fine.  If you're using a shop with free trades on Treasury securities (such as what Fidelity and I believe now Vanguard offers), this is even easier.  You can batch your orders up in small enough sizes so that even if something did go wrong (which it won't), you can keep your order to a comfortably small size.

Bottom line, though, is that it's really not worth worrying about very much.  You're doing just fine.

[murphy_p_t]

i seem to recall talking to the bond desk @ a broker...i think "market" orders work kind of like "limit" orders if market moves against you.