Invesco Canada blog

Insights, commentary and investing expertise

ETF trading: A guide to best practices


January 16, 2016
Subject | ETFs | PowerShares | Smart beta

1. Use limit orders

Limit orders offer advantages over market orders because they provide certainty on the trade price and act as a guard against overpaying. A market order may be effective when placing small trades in highly liquid ETFs, but there is a risk that it could sweep indiscriminately through the order book, leading to an undesirable price. A limit order, however, sets the price at which you are willing to transact. The closer your price is to the bid or ask, the greater the probability that your sell or buy will be executed. The use of a limit order is not without risk, as your trade may not be executable at the specified price.

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