Keep in mind that many of most of my price targets are placed at what I believe to be key support or resistance levels which are likely to induce a reaction when hit (i.e.-bounce for short, pullback for longs). With that in mind, remember that there are a lot of players in the market and odds are that a good number of them are also watching those levels to potential areas to buy or sell. Therefore, I typically set my limit order to sell (longs) or buy-to-cover (shorts), just below the target/resistance for longs and just above the target/support for shorts.
For example, that horizontal line at T1 on AAPL, which looks like it will come in before the blue uptrend line, was placed on the 5/18/12 reaction low of 522.18. Therefore, I can almost assure you that there are a lot of buy orders stacked in an around that level. Assuming AAPL does find support and bounce from around that level, like I believe it has a good chance of doing, parking your buy-to-cover order on your short or maybe for a long entry at 522.18 is likely to just barely miss getting filled if the buyers step in a bit early.
I try not to be greedy and milk every last cent out of my trades by placing my orders just above or below my targets. How far above or below do I place them? That all depends on several factors, including the price of the stock. It also depends on how well that support or resistance level is defined. One other factor is the amount or percentage of profit being targeted on the trade. For a quick 1-2 day trade with a 5% profit target, I might try to get very close to my actual target with my closing order. Let’s use the existing AAPL short trade for another example. This is a swing trade that was entered at the open on Aug 27th at 679.99 and the stock is just above T1 for a roughly 22.6% gain. AAPL has already made a low of 525.25 today vs. that target at 522.18 and although that’s about 3 points, or dollars, it’s only about 1/2 of 1% away from the price target. I believe a 0.5% buffer on a gain of 22.6% is well worth it to help assure a fill assuming that you plan to cover any or all of your shares at the first target.