Author Topic: Basics : the right way to place a share trade online  (Read 564 times)

neonlight

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Basics : the right way to place a share trade online
« on: February 20, 2019, 08:35:48 AM »
Hi guys,

I am using a local brokerage online trading platform to place a trade, because I am living in Asia, I usually place a trade before U.S. market opens, which some people say is not the right thing to do, can someone give some general advice?

Also, when doing a after hour trade like this, I usually just choose the "last price" and it is suppose to be "LO" aka Limit order so does it mean that even if I place the price higher it will still take the best price (lower than my placed price)?
 
Thanks, and again very beginner question so advice appreciated.

flipboard

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Re: Basics : the right way to place a share trade online
« Reply #1 on: February 20, 2019, 10:58:40 AM »
In general the first and last hours of trading are considered bad times to trade due to volatility - whether or not that's a real issue for index investors is something I don't know. (I personally trade later, but that's just because of the times that work for me.)

Most brokerages seem to assume you only want your trade to execute during regular trading hours, so you're probably not doing true "after hours trading" (that's a special time when you can still trade but with terrible liquidity / lots of volatility), so your order would generally execute as soon as the market opens.

Depending on brokerage you might be able to specify when you want the trade to execute, so you could maybe specify to have your order execute at 10:30am New York time, if you want to avoid the first ohur.

Limit Orders do take the "best" price, so if the markets drop in the morning you could end up with a better price. But like I explained, the markets are volatile in the first hour, so a limit order could end up with a fairly high price.


bacchi

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Re: Basics : the right way to place a share trade online
« Reply #2 on: February 20, 2019, 12:58:47 PM »
There's also a "VWAP" order, which takes the day's average price. Not all brokerages have this, though.

Stick with mutual funds -- they're valued at day's end and everyone gets the same price.

MustacheAndaHalf

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Re: Basics : the right way to place a share trade online
« Reply #3 on: February 20, 2019, 01:52:26 PM »
The rarer your investment, the higher the risk of paying more.  If you buy something like VTI or SCHB, where millions of dollars worth are trading. it shouldn't be a problem.  Those ETFs often have a buyer/seller difference (bid-ask spread) of $0.01 apart.  So high volume ETFs might even be okay before the market opens.

Since I mentioned a couple ETFs in another thread, I might as well mention their bid-ask spreads here:
VTI (Vanguard Total Stock Market ETF) Bid $143.28 .. Ask $143.29 ($0.01 apart)
VNQ (Vanguard Real Estate ETF) Bid $84.54 .. Ask $84.55 ($0.01 apart)

The largest cities in Asia are about 10-11 hours behind NY time, so when the market opens at 9:30 am it would be 10:30 pm (Shanghai, Beijing) or 11:30 pm (Tokyo).  And then if you're avoiding the first 30 min of trading, that's 11 pm to midnight.

flipboard

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Re: Basics : the right way to place a share trade online
« Reply #4 on: February 20, 2019, 10:55:58 PM »
Stick with mutual funds -- they're valued at day's end and everyone gets the same price.
OP doesn't live in the US, OP can't buy US mutual funds.

VWAP is more interesting. Even if OP's current broker doesn't support it, they could open an account with Interactive Brokers who do support it.

K-ice

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Re: Basics : the right way to place a share trade online
« Reply #5 on: March 12, 2019, 04:31:27 PM »
This post caught my eye.  I was expecting to see an easy explanation on market price vs. limit price vs stop price.

So without checking in on a daily basis I imagine I can a set a stock purchase or sale at a certain price?

For example if my money doubles I would like to sell. 

Or if a stock falls by 50% I might also like to sell as it could be tanking for some reason I didn't notice in the news. 

Sure, call this market timing, but I think it is good to have an exit strategy.

Someone else mentioned they play with small changes a bit. So if an ETF drops by 1% they will buy it. They have the money ready and a little blip helps them pull the trigger. If it doesn't drop within a week I think they buy it regardless. 

If you are going to buy something anyway why not wait for a little sale.

Andy R

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Re: Basics : the right way to place a share trade online
« Reply #6 on: March 12, 2019, 09:33:16 PM »
This post caught my eye.  I was expecting to see an easy explanation on market price vs. limit price vs stop price.

So without checking in on a daily basis I imagine I can a set a stock purchase or sale at a certain price?

For example if my money doubles I would like to sell. 

Or if a stock falls by 50% I might also like to sell as it could be tanking for some reason I didn't notice in the news. 

Sure, call this market timing, but I think it is good to have an exit strategy.

Someone else mentioned they play with small changes a bit. So if an ETF drops by 1% they will buy it. They have the money ready and a little blip helps them pull the trigger. If it doesn't drop within a week I think they buy it regardless. 

If you are going to buy something anyway why not wait for a little sale.

People pulled their money out of the market in 2014/15 because the market was "so high that a crash must be coming", and thought why not wait for a sale instead?
Never came.
The market is now 40% higher and climbing.

Your idea, much like dividend investing, buying closed end funds below NTA, currency hedging based on timing, seeing higher performance of actively managed funds of smaller companies in smaller markets thinking it is a free lunch, using buckets in retirement, all sound good until you actually look at the details and then it collapses under the weight of logic and reasoning.

K-ice

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Re: Basics : the right way to place a share trade online
« Reply #7 on: March 13, 2019, 02:35:10 PM »
I guess my scenario wasn't clear.  I am not looking to pull ALL of my investments out of the market.

My Vanguard ETFs are in their for the long haul.

I do have a small % in fun stocks that I should have sold when they doubled, they have now crashed. My philosophy was buy and hold but this shouldn't apply to individual stocks.

As for setting a limit price 0.5% below the current market price when I make my next small purchase, I don't see much harm in that.

I just wanted some clarification on how the buttons work.