facebookDoes buying an index etf at market price or limit price matter when holding for the long term? What about when selling to rebalance or liquidate the holdings? - Seedly

Matthew Tan

Undergraduate at NTU

28 Jun 2021

General Investing

Does buying an index etf at market price or limit price matter when holding for the long term? What about when selling to rebalance or liquidate the holdings?

When buying etfs like voo, qqq and vti through a broker, does it matter whether it is bought at the market price or is using a limit price preferred?

Discussion (2)

What are your thoughts?

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Personal preference. But general rule of thumb it doesn’t matter as much since you have no intention to sell tomorrow if the price fluctuations up or down. Even more so if you plan to DCA.

Limit price is for when you have a specific entry or sell price in mind which tbh is very hard to time given how massive some ETFs are.

Personally a good practice I use is taking profit over time. You can use limit sells to take small partial profit at fixed 5-10% profit intervals. Just to have some spare cash to buy back in the event of black swan events like covid etc.

Chris

28 Jun 2021

Owner and Writer at Tortoisemoney.com

Personally, I think it doesn't matter much. At the most, it fluctuates another 1%+ throughout the day. Even so, these fluctuations will likely be evened out in the DCA process anyways, so the overall impact would largely be irrelevant. For myself, I like to catch my orders at nice round numbers so I use limit orders, but that's just me hahahaha.

For selling, I guess it wouldn't matter much as well for the same reasons. Plus, it would be hard to time against short term market movement (intra day), so even if you tried, I think it might be futile.

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