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Market price or limit orders on index ETF options?
- Thread starter crgarcia
- Start date
It depends what you are doing of course. You need to worry more about the price when you are swing trading for the short term.
But I have used ETFs primarily to create a portfolio and plan on holding them at least a year. So now I almost always put in a market order.
I have tried to knock a few cents off using limit orders in the past, But half the time it seems I end up not getting filled because it takes off the other way.
So my advice is that as long as you know you are going to buy it anyway, even if the price moves up a bit, and you have a longer holding period, just put it in as a market order. It usually comes out about the same in the long run anyway.
But I have used ETFs primarily to create a portfolio and plan on holding them at least a year. So now I almost always put in a market order.
I have tried to knock a few cents off using limit orders in the past, But half the time it seems I end up not getting filled because it takes off the other way.
So my advice is that as long as you know you are going to buy it anyway, even if the price moves up a bit, and you have a longer holding period, just put it in as a market order. It usually comes out about the same in the long run anyway.
In my own experience I find that whenever I get my limit order filled at the mid price quickly after entering my order, invariably the price will remain better than my trade price for the rest of the day. Conversely, if I need to fight a bit to enter a position, the price I obtain ends up being a good one. This has led me to trade in a manner where my buy orders are a bit below the current mid, and my sells a bit higher. This way I get a price I am happy with, and typically get a price that seems "fair" to me as well. Obviously if you really need to make a trade immediately, then I'll take whatever I can get at that moment. But even then, limit orders are a must. Even on the larger index ETFs, spreads can widen, in which case you could give away nickels or even dimes away. I would rather go through the headache of fighting for my price in order to keep those nickels in my pocket.
ST
ST
Quote from ajna:
In my own experience I find that whenever I get my limit order filled at the mid price quickly after entering my order, invariably the price will remain better than my trade price for the rest of the day. Conversely, if I need to fight a bit to enter a position, the price I obtain ends up being a good one. This has led me to trade in a manner where my buy orders are a bit below the current mid, and my sells a bit higher. This way I get a price I am happy with, and typically get a price that seems "fair" to me as well. Obviously if you really need to make a trade immediately, then I'll take whatever I can get at that moment. But even then, limit orders are a must. Even on the larger index ETFs, spreads can widen, in which case you could give away nickels or even dimes away. I would rather go through the headache of fighting for my price in order to keep those nickels in my pocket.
ST
One of the traders in the "market wizards" said that the good trades are always hard to get in to, it is the bad trades that are easily filled.
I've experienced this many times. If I get a quick fill on the mid then it is usually a sign that the market is gonna move against me.