Page 1 of 1

Submitting an ETF sell order at Fidelity outside of market hours

Posted: Fri Aug 21, 2020 5:21 pm
by FIREchief
Scenario: a person wishes to sell some ETF shares (VTI) at Fidelity, but is unable to access a computer during market hours due to work. It looks like they can submit a "standard hours" order after market close that will execute during the next trading day. Considering the high liquidity of VTI, is it simplest to just submit the order for "x" shares to sell as follows:

Order type = market order
Time in force = on the open

I realize that for a less liquid security, a limit order might be safer. Is there any real concern with just using a market order as listed above? I've always just sold with market orders during the trading day. Thanks. 8-)

Re: Submitting an ETF sell order at Fidelity outside of market hours

Posted: Fri Aug 21, 2020 5:25 pm
by Escapevelocity
Well, there is a risk that some news would drive the ETF to gap up or down at the open. Otherwise, there shouldn't be a concern.

Re: Submitting an ETF sell order at Fidelity outside of market hours

Posted: Fri Aug 21, 2020 5:31 pm
by FIREchief
Escapevelocity wrote: Fri Aug 21, 2020 5:25 pm Well, there is a risk that some news would drive the ETF to gap up or down at the open. Otherwise, there shouldn't be a concern.
Thanks. VTI closed at $172.22 today. If a person was concerned about volatility would it be better to, as an example, submit the order as follows?

Order type = limit order
Limit price = $171.00
Time in force = day

It looks like that would accept up to a 0.7% drop but still sell. Thanks.

Re: Submitting an ETF sell order at Fidelity outside of market hours

Posted: Fri Aug 21, 2020 5:46 pm
by Escapevelocity
FIREchief wrote: Fri Aug 21, 2020 5:31 pm
Escapevelocity wrote: Fri Aug 21, 2020 5:25 pm Well, there is a risk that some news would drive the ETF to gap up or down at the open. Otherwise, there shouldn't be a concern.
Thanks. VTI closed at $172.22 today. If a person was concerned about volatility would it be better to, as an example, submit the order as follows?

Order type = limit order
Limit price = $171.00
Time in force = day

It looks like that would accept up to a 0.7% drop but still sell. Thanks.
Tricky question. You might be leaving something on the table if the trade opens around 172. Not sure if your broker would automatically improve the price. And if the ETF gaps down more than 1.22 at the open then your trade will not be triggered until and unless the market recovers to 171.

Re: Submitting an ETF sell order at Fidelity outside of market hours

Posted: Fri Aug 21, 2020 6:56 pm
by FIREchief
Escapevelocity wrote: Fri Aug 21, 2020 5:46 pm
FIREchief wrote: Fri Aug 21, 2020 5:31 pm
Escapevelocity wrote: Fri Aug 21, 2020 5:25 pm Well, there is a risk that some news would drive the ETF to gap up or down at the open. Otherwise, there shouldn't be a concern.
Thanks. VTI closed at $172.22 today. If a person was concerned about volatility would it be better to, as an example, submit the order as follows?

Order type = limit order
Limit price = $171.00
Time in force = day

It looks like that would accept up to a 0.7% drop but still sell. Thanks.
Tricky question. You might be leaving something on the table if the trade opens around 172. Not sure if your broker would automatically improve the price. And if the ETF gaps down more than 1.22 at the open then your trade will not be triggered until and unless the market recovers to 171.
Broker is Fidelity. I believe that they do improve the price. Are there really brokers that would sell a persons shares for $171 if there are buyers at $172? Yikes! :oops:

Re: Submitting an ETF sell order at Fidelity outside of market hours

Posted: Fri Aug 21, 2020 7:01 pm
by livesoft
I have submitted market orders overnight to be executed the next market open. Indeed, I have even done this with VTI as noted in this post:
viewtopic.php?p=2600976#p2600976

That was one of my best trades EVER. My trade took place as expected at the opening cross with no bid/ask spread. The market closed 4.5% lower by the end of the day, so I avoided a 4.5% one-day loss in VTI.

So no problems whatsoever.

Re: Submitting an ETF sell order at Fidelity outside of market hours

Posted: Fri Aug 21, 2020 7:07 pm
by Impatience
As long as you use a limit order you’ll be fine. Place it at or almost at the bid. Don’t do a market order - ever, but especially not during off-hours trading.

Re: Submitting an ETF sell order at Fidelity outside of market hours

Posted: Fri Aug 21, 2020 7:13 pm
by livesoft
Impatience wrote: Fri Aug 21, 2020 7:07 pm As long as you use a limit order you’ll be fine. Place it at or almost at the bid. Don’t do a market order - ever, but especially not during off-hours trading.
My brokers won't let one submit a trade to execute during extended hours unless it is a limit order. But the OP is writing about a sell order to execute when the market is open, so no limit order is really needed for that with VTI. If the sell order is submitted when the market is not open and it is a market order, then it will execute at the next opening cross. It will be similar to submitting a mutual fund share sell order: You won't know the price ahead of the time, but you will get a fair price with no bid/ask sprea

The OP could divide up the shares into more than one order, too. One order could be a market order for some of the shares and one could be a limit order. I have looked at the futures market to guesstimate a limit price to use. Example: S&P500 futures are up 0.74% an hour before the market opens, so set limit price at least 0.7% higher than the previous close for VTI. No guarantees though like the market order would have to execute.

Re: Submitting an ETF sell order at Fidelity outside of market hours

Posted: Fri Aug 21, 2020 7:22 pm
by FIREchief
livesoft wrote: Fri Aug 21, 2020 7:01 pm I have submitted market orders overnight to be executed the next market open. Indeed, I have even done this with VTI as noted in this post:
viewtopic.php?p=2600976#p2600976

That was one of my best trades EVER. My trade took place as expected at the opening cross with no bid/ask spread. The market closed 4.5% lower by the end of the day, so I avoided a 4.5% one-day loss in VTI.

So no problems whatsoever.
Thank you. We're not talking about a really large amount of money here, so the question is more about mechanics than maximizing value. 8-)

Re: Submitting an ETF sell order at Fidelity outside of market hours

Posted: Fri Aug 21, 2020 7:24 pm
by FIREchief
Impatience wrote: Fri Aug 21, 2020 7:07 pm As long as you use a limit order you’ll be fine. Place it at or almost at the bid. Don’t do a market order - ever, but especially not during off-hours trading.
I wasn't proposing an off hours trade. You may wish to review the OP. That said, how does one know the bid when the market is closed? :confused

Also, to clarify, I'm asking this for somebody else. I've dealt very little with ETFs, but when I have sold them it has been during market hours. That's not what I'm asking about here.

Re: Submitting an ETF sell order at Fidelity outside of market hours

Posted: Fri Aug 21, 2020 7:34 pm
by vineviz
FIREchief wrote: Fri Aug 21, 2020 5:21 pm Scenario: a person wishes to sell some ETF shares (VTI) at Fidelity, but is unable to access a computer during market hours due to work. It looks like they can submit a "standard hours" order after market close that will execute during the next trading day. Considering the high liquidity of VTI, is it simplest to just submit the order for "x" shares to sell as follows:

Order type = market order
Time in force = on the open

I realize that for a less liquid security, a limit order might be safer. Is there any real concern with just using a market order as listed above? I've always just sold with market orders during the trading day. Thanks. 8-)
I'd simply use a market order, but I were the kind of person who irrationally preferred limit orders I'd set the limit more than 1.5% below the prior day's close: any higher limit than that and a failure to execute is higher than I'd be comfortable with.

Re: Submitting an ETF sell order at Fidelity outside of market hours

Posted: Fri Aug 21, 2020 7:51 pm
by MotoTrojan
vineviz wrote: Fri Aug 21, 2020 7:34 pm
FIREchief wrote: Fri Aug 21, 2020 5:21 pm Scenario: a person wishes to sell some ETF shares (VTI) at Fidelity, but is unable to access a computer during market hours due to work. It looks like they can submit a "standard hours" order after market close that will execute during the next trading day. Considering the high liquidity of VTI, is it simplest to just submit the order for "x" shares to sell as follows:

Order type = market order
Time in force = on the open

I realize that for a less liquid security, a limit order might be safer. Is there any real concern with just using a market order as listed above? I've always just sold with market orders during the trading day. Thanks. 8-)
I'd simply use a market order, but I were the kind of person who irrationally preferred limit orders I'd set the limit more than 1.5% below the prior day's close: any higher limit than that and a failure to execute is higher than I'd be comfortable with.
+1 especially for VTI. Intraday for modest amounts I happily use market orders for much less liquid stocks like IVAL or AVUV.

Re: Submitting an ETF sell order at Fidelity outside of market hours

Posted: Fri Aug 21, 2020 8:06 pm
by arf30
Since it's VTI I'd probably do a market order and then switch to mutual funds which are a better fit for the situation you've described.

Re: Submitting an ETF sell order at Fidelity outside of market hours

Posted: Fri Aug 21, 2020 8:24 pm
by FIREchief
arf30 wrote: Fri Aug 21, 2020 8:06 pm Since it's VTI I'd probably do a market order and then switch to mutual funds which are a better fit for the situation you've described.
I only have one ETF holding, and it is less than 2% of my holdings. I’m not asking for myself. 8-)

Also, I hope you would agree that somebody with appreciated ETFs in an after tax account shouldn’t just “switch to mutual funds.” :?

Re: Submitting an ETF sell order at Fidelity outside of market hours

Posted: Fri Aug 21, 2020 8:27 pm
by FIREchief
MotoTrojan wrote: Fri Aug 21, 2020 7:51 pm
vineviz wrote: Fri Aug 21, 2020 7:34 pm
FIREchief wrote: Fri Aug 21, 2020 5:21 pm Scenario: a person wishes to sell some ETF shares (VTI) at Fidelity, but is unable to access a computer during market hours due to work. It looks like they can submit a "standard hours" order after market close that will execute during the next trading day. Considering the high liquidity of VTI, is it simplest to just submit the order for "x" shares to sell as follows:

Order type = market order
Time in force = on the open

I realize that for a less liquid security, a limit order might be safer. Is there any real concern with just using a market order as listed above? I've always just sold with market orders during the trading day. Thanks. 8-)
I'd simply use a market order, but I were the kind of person who irrationally preferred limit orders I'd set the limit more than 1.5% below the prior day's close: any higher limit than that and a failure to execute is higher than I'd be comfortable with.
+1 especially for VTI. Intraday for modest amounts I happily use market orders for much less liquid stocks like IVAL or AVUV.
Thank you both! :sharebeer

Re: Submitting an ETF sell order at Fidelity outside of market hours

Posted: Tue Aug 25, 2020 1:18 pm
by FIREchief
vineviz wrote: Fri Aug 21, 2020 7:34 pm
FIREchief wrote: Fri Aug 21, 2020 5:21 pm Scenario: a person wishes to sell some ETF shares (VTI) at Fidelity, but is unable to access a computer during market hours due to work. It looks like they can submit a "standard hours" order after market close that will execute during the next trading day. Considering the high liquidity of VTI, is it simplest to just submit the order for "x" shares to sell as follows:

Order type = market order
Time in force = on the open

I realize that for a less liquid security, a limit order might be safer. Is there any real concern with just using a market order as listed above? I've always just sold with market orders during the trading day. Thanks. 8-)
I'd simply use a market order, but I were the kind of person who irrationally preferred limit orders I'd set the limit more than 1.5% below the prior day's close: any higher limit than that and a failure to execute is higher than I'd be comfortable with.
Thanks. I helped my friend do this yesterday. VTI closed at 173.87. He put in a standard hours limit order last night of 173.00 (day til 4:00 ET). That's ~0.5% below yesterday's close. The market opened at 174.22 this morning, and that's what his VTI sold at.

Re: Submitting an ETF sell order at Fidelity outside of market hours

Posted: Tue Aug 25, 2020 8:47 pm
by grabiner
For a liquid ETF, this shouldn't cause a problem. At the market open, there is an opening cross, at which as many open orders as possible are matched; you will get the same price as everyone else.

For an illiquid ETF, you can lose by doing this, because your own order can move the cross price. (The same thing happens when you place a market order in an open market. If you buy more shares than are available at the ask price, you will fill the rest of your order at the next best price.)