Trading best practices

A few tips and tricks for trading ETFs

There are many ways to make the best out of your ETF investing. Below are a few tips and tricks to help you.

1. Take your time.

Since ETFs have intraday liquidity, you know the value of your investment in real time, rather than at the end of the day, as with mutual funds. Use caution when placing trades during the first and last 30 minutes of the trading day, when volatility can be at its highest.

2. Know your markets from your limits.

When placing orders there are generally two options: a market order, buying or selling a security at the current price, so that execution is the priority; and a limit order, buying or selling a security at no more or no less than a specific price of your choosing. Consider limit orders, because they give you more control – but it is important to keep an eye on your limit order, as limit orders are not guaranteed to be completed.

3. Time zones are money.

Try to trade international ETFs while their underlying markets are still open. Time zones can certainly come into play. For example, if you are trading European ETFs in Eastern Standard Time, consider placing your buy order while the market is open in local time, because the bid price is typically more favourable before the European markets close.

4. Contact your broker or dealer.

When placing trades for large amounts, contact your broker or dealer to get help and information you need to execute a block order.