What time of the day is good to buy ETF / Index funds ?

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johnpau
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What time of the day is good to buy ETF / Index funds ?

Post by johnpau »

I'm completely new to this investing. Correct me if I'm wrong.

Trying to get my feet wet during this time, to see how thing usually work.
I know I will not gamble with any big number, but very limited number 5K (so I can get a good night sleep). Long term. I'm sure everyone wants to buy a lows.

Now coming to purchasing ETFs or Index funds (either with Vanguard or Fidelity).

I think ETF and Index Funds price is determined based on the price after the stock market closes.

What time of the day is it good to place an order for the ETF or Index Funds based on the below scenario ?


Monday = stock market is in positive number (+)
Tuesday = stock market is in negative number (-)
Wednesday = stock market is in positive number (+)


Definitely we all want to buy on Tuesday when things are going low,
lets say if we place an order at 3PM EST on Tuesday , are we guaranteed
to get the low rate as on Tuesday closing ?

If we place an order after 5PM EST on Tuesday then we would get rate as on Wednesday closing which might be high.
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greenspam
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Re: What time of the day is good to buy ETF / Index funds ?

Post by greenspam »

There is a big difference between ETFs and Mutual Funds:

ETFs you can buy/sell all day long, they trade up and down all day long, like any regular stock. You can buy and sell an ETF at different prices in the same day...

In sharp contrast, Mutual Funds are only priced once per day, at the closing of the market on any given day.
as always, | peace, | greenie.
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sometimesinvestor
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Re: What time of the day is good to buy ETF / Index funds ?

Post by sometimesinvestor »

greenspm has explained that if you buy at any time during the period stocks are trading you get the price present when you submit the order. A possible time to buy is at 11:35 am. Basically european markets close at that time and if they have an upday our market will usually be up. SImilarly a down day for europe will often lead to a down day.A year from now the hour you buy is unlikely to matter much
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Re: What time of the day is good to buy ETF / Index funds ?

Post by whereskyle »

johnpau wrote: Tue Apr 07, 2020 1:39 pm I'm completely new to this investing. Correct me if I'm wrong.

Trying to get my feet wet during this time, to see how thing usually work.
I know I will not gamble with any big number, but very limited number 5K (so I can get a good night sleep). Long term. I'm sure everyone wants to buy a lows.

Now coming to purchasing ETFs or Index funds (either with Vanguard or Fidelity).

I think ETF and Index Funds price is determined based on the price after the stock market closes.

What time of the day is it good to place an order for the ETF or Index Funds based on the below scenario ?


Monday = stock market is in positive number (+)
Tuesday = stock market is in negative number (-)
Wednesday = stock market is in positive number (+)


Definitely we all want to buy on Tuesday when things are going low,
lets say if we place an order at 3PM EST on Tuesday , are we guaranteed
to get the low rate as on Tuesday closing ?

If we place an order after 5PM EST on Tuesday then we would get rate as on Wednesday closing which might be high.
If you're holding long enough, it really doesn't matter. If you have the time to obsess about getting the best prices, you might look at the beginning and the end of the trading day: the beginning of the day can have extreme volatility up and down so you can name an extreme limit price and often get it. The end of the day might have a big rally or sell off. In the long term it does not matter and is not worth the time. In the short term worrying about this can make you feel (undeservedly) like a genius or a fool depending on what happens after you buy. It's not the healthiest emotion for a long-term investor.
"I am better off than he is – for he knows nothing and thinks that he knows. I neither know nor think that I know." - Socrates. "Nobody knows nothing." - Jack Bogle
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Re: What time of the day is good to buy ETF / Index funds ?

Post by alex_686 »

Johnpau, I hate to say this but your entire premise is wrong. Stock movements are highly random. The real answer to most of the questions you pose is "flip a coin - it would be just as accurate." I know a couple of people who have got PhDs in math and deep experience, fast computers, and good market data. They make money when they are right 60% of the time.

Do not trade the first hour or the last hour the market is open. Things tend to be chaotic. Do not enter in a order to be filled at the open or close. Once again, chaotic.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
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johnpau
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Re: What time of the day is good to buy ETF / Index funds ?

Post by johnpau »

sometimesinvestor wrote: Tue Apr 07, 2020 2:03 pm greenspm has explained that if you buy at any time during the period stocks are trading you get the price present when you submit the order. A possible time to buy is at 11:35 am. Basically european markets close at that time and if they have an upday our market will usually be up. SImilarly a down day for europe will often lead to a down day.A year from now the hour you buy is unlikely to matter much

Dumb question.
Does VTSAX includes European markets too ? I was thinking it is only US based Index fund .

Correct me if I'm wrong
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johnpau
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Re: What time of the day is good to buy ETF / Index funds ?

Post by johnpau »

alex_686 wrote: Tue Apr 07, 2020 2:10 pm Johnpau, I hate to say this but your entire premise is wrong. Stock movements are highly random. The real answer to most of the questions you pose is "flip a coin - it would be just as accurate." I know a couple of people who have got PhDs in math and deep experience, fast computers, and good market data. They make money when they are right 60% of the time.

Do not trade the first hour or the last hour the market is open. Things tend to be chaotic. Do not enter in a order to be filled at the open or close. Once again, chaotic.
Thanks for the advise. Appreciate it.

So would 11.45am or midday be the best time ?
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Re: What time of the day is good to buy ETF / Index funds ?

Post by alex_686 »

johnpau wrote: Tue Apr 07, 2020 2:19 pm So would 11.45am or midday be the best time ?
Anywhere between 11 am to 3 pm. Then check to the news to see if people are running around with their hair on fire. Normally no, but the last few weeks have been interesting.

And in tandem with this advice, become a discipline investor. Write up a IPS, come up with a plan, and stick with it.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
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johnpau
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Re: What time of the day is good to buy ETF / Index funds ?

Post by johnpau »

During 2008 crash, I didn't have $$ to invest. And was always scared of stock market.

Now have some $$ to invest. I know as a new investor it is not good time to get in, especially during this volatile market.

But I thought if we ride this volatile market and see how the experience would be.

Anyhow planing to get my feet wet with the $$ which I'm OK loosing. Anyhow I'm investing for long term, but wanted to experience this craziness in the market. Which I wouldn't have if working at office. Thanks to stay-at-home and work :)
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CAsage
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Re: What time of the day is good to buy ETF / Index funds ?

Post by CAsage »

If you are really buying ETF, learn what a limit order is. You can put your buy order in for NNN shares at XXX price, and it will execute at that price whenever it hits. There is absolutely no pattern or consistency to time of day or day of the week; the market is volatile and may jump up or down all day. If you are serious about wanting to buy, pick a price that is close to the current price so it's likely to "hit". If you want to buy at a bargain price AND are lucky, pick a low price. No one really knows. If you are buying mutual index funds, you get the market price at the end of the day - and I've seen that swing way up or down in the last few minutes before closing which has taught me it's not predictable.
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Re: What time of the day is good to buy ETF / Index funds ?

Post by Chrono Triggered »

johnpau wrote: Tue Apr 07, 2020 1:39 pm Monday = stock market is in positive number (+)
Tuesday = stock market is in negative number (-)
Wednesday = stock market is in positive number (+)
Last Friday.
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Re: What time of the day is good to buy ETF / Index funds ?

Post by Peculiar_Investor »

sometimesinvestor wrote: Tue Apr 07, 2020 2:03 pm greenspm has explained that if you buy at any time during the period stocks are trading you get the price present when you submit the order. A possible time to buy is at 11:35 am.
Can you please clarify, 11:35 am in what time zone?
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Re: What time of the day is good to buy ETF / Index funds ?

Post by retired@50 »

CAsage wrote: Tue Apr 07, 2020 5:58 pm If you are really buying ETF, learn what a limit order is.
+1
This...^^^ for sure. You can choose what price you pay. If your price isn't available, you don't buy.

Regards,
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Ferdinand2014
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Re: What time of the day is good to buy ETF / Index funds ?

Post by Ferdinand2014 »

Every day is a good day to buy index mutual funds. I personally would never buy ETF’s. Life is much easier just setting up automatic investments every week/month and moving on. You can’t do that with ETF’s at Vanguard or Fidelity. The less you interact with your investments, the better off you will be as you will decrease your temptation to day trade, skip a week, buy high and sell low, or fiddle with your plan. You also avoid having to time your trades, set limit orders or be tempted by the thousands of slice and dice useless ETF’s marketed now. If your at Vanguard buy either VTSAX or VFIAX and call it good. If you are at Fidelity buy FSKAX or FXAIX. I buy FXAIX (Fidelity 500 index fund) every Friday, automatically in all of my accounts and I am extremely happy and do not change course.
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Re: What time of the day is good to buy ETF / Index funds ?

Post by grabiner »

The best time to buy an ETF is the time that the spread is smallest, because you can expect to lose about half the spread.

With high-volume ETFs such as VTI and VXUS, that doesn't matter much; you can usually buy these at a spread of a few cents at any time the market is open.

With lower-volume ETFs, the spread is often very large when the market opens; even in less turbulent markets, I have seen 1% spreads on VSS (Vanguard FTSE All-World Ex-US Small-Cap ETF) at 9:31. If you see such a spread, wait for it to narrow before trading; the market is equally likely to go up or down, but the trading costs are likely to go down.

Mutual funds can be bought at any time of day. You will get the closing price, so if you buy before the close, you may gain or lose money depending on market movements, but either one is equally likely.
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Re: What time of the day is good to buy ETF / Index funds ?

Post by mega317 »

johnpau wrote: Tue Apr 07, 2020 2:31 pm I know as a new investor it is not good time to get in, especially during this volatile market.
How do you know this? I think it's wrong. By the time you have decided it's time to get in, prices may very well be higher than they are now. Then you're at risk of thinking you'd be buying high and waiting for another dip, which could take a long time and not drop as far as they are now, then you have to decide when again to get in.
johnpau wrote: Tue Apr 07, 2020 1:39 pm Long term.
This is the wisest thing you said.
https://www.bogleheads.org/forum/viewtopic.php?t=6212
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Re: What time of the day is good to buy ETF / Index funds ?

Post by heyyou »

from whereskyle
If you're holding long enough, it really doesn't matter.
by Ferdinand2014 »
Every day is a good day to buy index mutual funds.
Your expected holding period is the rest of your life plus part of the lives of any heirs. Every share purchased now, will be at a good price in a few years, regardless of this week's or this month's prices.
Who said "The best holding period for stock purchases is forever?"

At age 70, do I care about what I paid for my first index shares in 1980 when the 401k became available at my former employer?
The perspective is for the long run, not whether current prices will be profitable this month or before summer.
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Re: What time of the day is good to buy ETF / Index funds ?

Post by Poppy1234 »

I’m a beginner too so this post was really helpful. Just to confirm, OP’s comment below is correct?

Quote:
“Definitely we all want to buy on Tuesday when things are going low,
lets say if we place an order at 3PM EST on Tuesday , are we guaranteed
to get the low rate as on Tuesday closing ?

If we place an order after 5PM EST on Tuesday then we would get rate as on Wednesday closing which might be high.”
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Re: What time of the day is good to buy ETF / Index funds ?

Post by madbrain »

johnpau wrote: Tue Apr 07, 2020 1:39 pm Definitely we all want to buy on Tuesday when things are going low,
lets say if we place an order at 3PM EST on Tuesday , are we guaranteed
to get the low rate as on Tuesday closing ?
You can place a "Market on close" order and it will execute at the market closing price.

Your fallacy is of course that you can't predict the closing price even one hour before closing. For example, the SPY ETF traded in a range of $264.89 - $275.03 on tuesday. And it dropped from $269.52 at 3:48pm down to $265.18 at 4pm, in a period of just 12 minutes, near the low of the day.
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Re: What time of the day is good to buy ETF / Index funds ?

Post by KingRiggs »

I use a sundial to tell time, so I like to buy/sell when the shadow is kinda between 11 and 12. Or maybe earlier if it's a cloudy day and I can't really see the shadow. I never transact on rainy days, because who knows what time it is? :twisted:
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Re: What time of the day is good to buy ETF / Index funds ?

Post by grabiner »

Poppy1234 wrote: Wed Apr 08, 2020 12:18 am I’m a beginner too so this post was really helpful. Just to confirm, OP’s comment below is correct?

Quote:
“Definitely we all want to buy on Tuesday when things are going low,
lets say if we place an order at 3PM EST on Tuesday , are we guaranteed
to get the low rate as on Tuesday closing ?

If we place an order after 5PM EST on Tuesday then we would get rate as on Wednesday closing which might be high.”
The problem is that you don't know which way the market is going to to move. If the market rises Wednesday, it is better to buy on Tuesday than on Wednesday. But if the market falls Wednesday, you want to sell on Tuesday but buy on Wednesday.

Since the market rises slightly more than it falls (that is why it goes up in the long run), the best day to buy is the first day you have the money to buy.

(edited to fix typo)
Last edited by grabiner on Wed Apr 08, 2020 9:39 am, edited 1 time in total.
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Re: What time of the day is good to buy ETF / Index funds ?

Post by Wiggums »

grabiner wrote: Wed Apr 08, 2020 8:36 am The problem is that you don't know which way the market is going to to move. If the market rises Wednesday, it is better to buy on Tuesday than on Wednesday. But if the market falls Wednesday, you want to buy on Tuesday.

Since the market rises slightly more than it falls (that is why it goes up in the long run), the best day to buy is the first day you have the money to buy.
I agree. I find that automated buying works best for me. It takes all the guessing out of the equation.
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Re: What time of the day is good to buy ETF / Index funds ?

Post by CAsage »

Poppy1234 wrote: Wed Apr 08, 2020 12:18 am I’m a beginner too so this post was really helpful. Just to confirm, OP’s comment below is correct?

Quote:
“Definitely we all want to buy on Tuesday when things are going low,
lets say if we place an order at 3PM EST on Tuesday , are we guaranteed
to get the low rate as on Tuesday closing ?

If we place an order after 5PM EST on Tuesday then we would get rate as on Wednesday closing which might be high.”
The part about Tuesday is a joke. It is true that if you place a mutual fund order to buy before closing, you will get the (unknown exactly) price for the day when it closes. It may or may not be low. The only way to guarantee a price is to buy an ETF and place a limit order. In the old days (like, more than a month ago...) I only bought or sold mutual funds because the daily volatility was minimal (generally). Today, when prices swing 5 to 9 percent DAILY I only buy ETF, so at least I know what I'm paying.
Salvia Clevelandii "Winifred Gilman" my favorite. YMMV; not a professional advisor.
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