How Buying and Selling Below the Market Works

One instance in which the term “below the market” is frequently used is when talking about stocks. Usually, when you buy a share below the market, it simply means that you bought it and the price went up. In other words, you bought it when the trading price for that share was less than what it is currently. Trading below the market can also pertain to you making an order, which is basically when you make directions to automatically buy (or sell) a share when it hits a certain price or to buy a share at a price that is less than what it currently is; this means you place an order in anticipation for when the price is below the market.

Buying below the market also applies to housing prices and rates as well because the housing industry is a dynamic market, much like stocks. If you bought a house below the market, you bought that house at a reduced price in comparison to the current status of the market. It should be noted that, as housing prices vary on a case-by-case basis, it is possible to buy a house below the market, at a cheap price when considering demographics and the current state of the market without changes in pricing in the housing market as a whole. You can also speak about mortgage rates as being below the market; these reduced rates are often called below the market rates (BMR).

In relation to retail and business, “below the market” normally refers to selling, not buying like in the cases of stocks and housing. When a company decides to sell a product below the market, goods and/or services are sold at a reduced price in comparison to the prices set by other competitors in the same line of work. This is done to beat out the competition and to allow a company to influence or control market prices. However, once the company that was originally selling products below the market has asserted dominance in the field, they will usually raise prices at a gradual rate.

Example of Below the Market

If you bought a share of a company for 30 dollars and the price for that company went up to 40 dollars, you could then say that you originally bought your share at a price that is below the market. Essentially, you bought that share for a lower price than what is currently being advertised in the market.

On the other hand, if that share originally cost 40 dollars and you sent in an order for 30 dollars (you want to buy it when the price goes down to 30 dollars), you just set a below the market order. In this case, you are waiting for the price to drop below the market or for the price to drop below the current buying price in the market.