Vanguard - No More SpecID for Limit Orders

[livesoft]

For what kind(s) of account was this about?

I have not received any such communication from Vanguard.

[a1smith]

Interactive Brokers allows for lot specific trades of any sort. You can also change the lots later on until the trade settles. This is just one more nail in the coffin - I'm in the process of closing out my after-tax account. Roth IRA's have already been moved.

[snookslayer]

Interactive Brokers allows for lot specific trades of any sort. You can also change the lots later on until the trade settles. This is just one more nail in the coffin - I'm in the process of closing out my after-tax account. Roth IRA's have already been moved.

Same for Fidelity my entire family moved all our accounts. Was curious what Bogeheads had to say looks like the same dismay as my investing service.

[ssel]

You could open another Vanguard account (your selling account), move the lots you want to sell in it, and sell from that account with a limit order.

Thank you for this idea. I've never done this and am unsure if Vanguard allows me to choose which lots to move to another brokerage account. But I'll keep it in mind to try in the future. I'd have to open a second brokerage account though uggg

I already had two VG brokerage accounts, and two months ago I set out to do exactly this. I transfer cash between the two accounts all the time, but not ETFs. I started with the normal "transfer" process, but once I indicated that I needed to use specID it threw me into a different workflow. I needed to fill out an online PDF transfer of ownership form, have it DocuSigned, then submit it to be read by a human. It warned me that the transfer could take up to 10 business days. I assumed that this was a worst-case estimate, and that since the two accounts were both owned by me and had the exact same registration, and I was transferring VOO which is almost the definition of a vanilla asset type, that it would probably be quicker. It in fact took 10 business days.

A small aside: my motivation for doing this was different from yours. I wanted to contribute some specific VOO shares held at VG to a new DAF that I'd opened at Fidelity. I started the transfer request at Fidelity's website, and it asked me for account number, ticker symbol, and number of shares, but gave no way to specify specific lots. I now believe that if I had continued with the process it would have asked for specID before the final "commit" button, but I didn't know that at the time. So I decided I'd simply move the specific VOO shares to my second account which didn't hold any VOO, then transfer "all VOO". How hard could that be?

[rkhusky]

A small aside: my motivation for doing this was different from yours. I wanted to contribute some specific VOO shares held at VG to a new DAF that I'd opened at Fidelity. I started the transfer request at Fidelity's website, and it asked me for account number, ticker symbol, and number of shares, but gave no way to specify specific lots. I now believe that if I had continued with the process it would have asked for specID before the final "commit" button, but I didn't know that at the time. So I decided I'd simply move the specific VOO shares to my second account which didn't hold any VOO, then transfer "all VOO". How hard could that be?

If it was over $25K, it would’ve been easier to contribute to Vanguard DAF and then transfer to Fidelity DAF.

[edge]

Fidelity allows limit orders with specID.

Others will have to post what Schwab and Fidelity offer. I would not take Vanguard's assertion that this is aligning with industry standards at face value of course, but maybe it is. If Schwab and Fidelity still offer it and you do it often, then convert to ETFs and switch brokerages. Vanguard is basically giving you "permission" to do just that with their email.

[bho]

I keep seeing that some people have received this communication (that Vanguard no longer allows SpecID for non-market orders) and others did not (specifically, I haven't received it). I just sent a message to my Vanguard relationship manager to ask if this applies to all or only to some accounts. I'll post an update when I hear back from him.

[foosball]

This change is part of our ongoing efforts to enhance the client experience, better align with industry standards, and streamline the trading process.

Vanguard

I despise this modern marketing doublespeak. "We stole your purse to enhance your walking experience."

[Hot Sauce]

It’s bad enough that vanguard investors lose this flexibility. But the real insult is vanguard telling us it’s being done to enhance our experience. Vanguard must thinks its investors are airheads.

[Hot Sauce]

Vanguard

I despise this modern marketing doublespeak. "We stole your purse to enhance your walking experience."

The era of peak propaganda

[evancox10]

You're kidding me? Is this for real? What is the logic?

They say:

"Why are we making this change?
Leveraging other methods for non-market trades enhances the ease to execute your trade and ensures you have an accurate inventory of available lots for trades placed during the time your non-market order remains open."

I don't know what they mean by this.

An example of what they mean: you place a limit order to sell specific shares, then before that is triggered you do market order to sell the same shares.

[ssel]

If it was over $25K, it would’ve been easier to contribute to Vanguard DAF and then transfer to Fidelity DAF.

Yup! I actually wound up doing this, because by the time my shares finally transferred between Vanguard accounts, I was worried that there wasn't time left to be certain that my contribution would to reach Fidelity by the end of the year. So I opened a Vanguard DAF and contributed the shares to that instead (quick and smooth), then transferred it all to my Fidelity DAF (not quick, but still smooth). I sure wish I'd given myself a few extra weeks, so I wouldn't have needed to bother with that.

And if that bit of bad timing wasn't enough... by the time I was finally able to transfer the shares to the Vanguard DAF, the transfer happened to go through exactly on the ex-dividend date. Don't ever make that mistake!

And finally...

I started with the normal "transfer" process, but once I indicated that I needed to use specID it threw me into a different workflow. I needed to fill out an online PDF transfer of ownership form, have it DocuSigned, then submit it to be read by a human. It warned me that the transfer could take up to 10 business days.

If I ever again want to isolate shares in a separate Vanguard account like this, I'd try doing it a different and more roundabout way. Transferring shares between accounts without specID is a much quicker and more automated process: just enter the info on the website, with no DocuSign form to sign and submit in PDF form. Supposed I had purchased shares in 3 lots -- A, B, and C in that order -- and I wanted to transfer only lot B. Here's what I'd do:

- make a FIFO transfer of both lots A and B from account 1 to account 2
- make a FIFO transfer of lot A from account 2 to account 1
- now account 1 has lots A and C, and account 2 has lot B

The two quick transactions should take a lot less time than the one slow transaction.

Thank you, Vanguard!

[evancox10]

Thank you for this idea. I've never done this and am unsure if Vanguard allows me to choose which lots to move to another brokerage account. But I'll keep it in mind to try in the future. I'd have to open a second brokerage account though uggg

I already had two VG brokerage accounts, and two months ago I set out to do exactly this. I transfer cash between the two accounts all the time, but not ETFs. I started with the normal "transfer" process, but once I indicated that I needed to use specID it threw me into a different workflow. I needed to fill out an online PDF transfer of ownership form, have it DocuSigned, then submit it to be read by a human. It warned me that the transfer could take up to 10 business days. I assumed that this was a worst-case estimate, and that since the two accounts were both owned by me and had the exact same registration, and I was transferring VOO which is almost the definition of a vanilla asset type, that it would probably be quicker. It in fact took 10 business days.

A small aside: my motivation for doing this was different from yours. I wanted to contribute some specific VOO shares held at VG to a new DAF that I'd opened at Fidelity. I started the transfer request at Fidelity's website, and it asked me for account number, ticker symbol, and number of shares, but gave no way to specify specific lots. I now believe that if I had continued with the process it would have asked for specID before the final "commit" button, but I didn't know that at the time. So I decided I'd simply move the specific VOO shares to my second account which didn't hold any VOO, then transfer "all VOO". How hard could that be?

No, there is no way to specify tax lots in the Fidelity ACATS flow. In general, the sending firm is responsible for communicating the cost basis information to the receiving firm. So to transfer specific lots, you submit a letter of instruction to the sending firm stating lots are to be transferred.

I just did this in December for the exact same reason as you, although it was from Merrill brokerage to Fidelity. I was also under a time crunch. It went smoothly, just a couple days to complete and cost basis information transferred quickly as well.

[rkhusky]

If it was over $25K, it would’ve been easier to contribute to Vanguard DAF and then transfer to Fidelity DAF.

Yup! I actually wound up doing this, because by the time my shares finally transferred between Vanguard accounts, I was worried that there wasn't time left to be certain that my contribution would to reach Fidelity by the end of the year. So I opened a Vanguard DAF and contributed the shares to that instead (quick and smooth), then transferred it all to my Fidelity DAF (not quick, but still smooth). I sure wish I'd given myself a few extra weeks, so I wouldn't have needed to bother with that.

The couple times I have sent from Vanguard to Fidelity, it’s taken about a week. I presume because Vanguard sends a check.

[snookslayer]

Should anyone want some comedy feel free to call CS and ask why and how this is to my advantage or experience by taking away my ability to tax gain/loss harvest specific lots at will.

Disappointing for sure I had no issues with Vanguard for over 3 decades, but this was an intractable problem. Our family has moved 4 brokerage and 3 IRA's to Fidelity now which is of course a nothing burger to Van we are just client number whatever. So odd Fidelity is not 'industry standard' and allows me to tax gain/loss sell lots at will.

My initial impression of Fidelity's order execution page is far better layout. Also much easier to get to bank transfers from sweep account and account layout page gets me to where I want to go in less clicks than Vanguard. So far so good.

[bho]

I keep seeing that some people have received this communication (that Vanguard no longer allows SpecID for non-market orders) and others did not (specifically, I haven't received it). I just sent a message to my Vanguard relationship manager to ask if this applies to all or only to some accounts. I'll post an update when I hear back from him.

OK, I finally heard back from my Vanguard representative:
- He said the communication was sent to all Vanguard clients, and he doesn't know why I (and seemingly others on this forum) have not received it
- There are 2 possible workarounds:
1) Move the specific lots that you want to sell to a different account with identical registration. Then sell all the shares, but since you only transferred one lot (or only the desired lots) then you're free to use a limit order (because you are no longer restricting the sale to specific lots).
I don't know how much time it would take to move specific lots to another account, and whether this can be done online or requires a call to Vanguard - I asked him all these.
2) Alternatively, you can initiate a limit order using another cost method, and then call Vanguard trade desk and update the lots prior to settlement.

The second option seems easier to me - it's a standard operation that allows you to choose lots prior to settlement (which is shorter now with the recent transition to T+1).

[ssel]

I don't know how much time it would take to move specific lots to another account, and whether this can be done online or requires a call to Vanguard - I asked him all these.

I did this a couple of months ago. It took 2 entire weeks. It was all done online on my end, but it wasn't all automated. It involved filling out a PDF form and getting it signed through DocuSign, and then waiting for an actual person to read and process the form.

A few posts back I proposed a potential workaround using a pair of FIFO transfers that might possibly speed things up, if i ever need to do it again:
viewtopic.php?p=8244521#p8244521

For your use case, you could do an automated FIFO transfer (to another account) of all the shares older than the ones you want to sell. Then place a FIFO limit order. After the sale, transfer the shares back.

[bho]

I don't know how much time it would take to move specific lots to another account, and whether this can be done online or requires a call to Vanguard - I asked him all these.

I did this a couple of months ago. It took 2 entire weeks. It was all done online on my end, but it wasn't all automated. It involved filling out a PDF form and getting it signed through DocuSign, and then waiting for an actual person to read and process the form.

A few posts back I proposed a potential workaround using a pair of FIFO transfers that might possibly speed things up, if i ever need to do it again:
viewtopic.php?p=8244521#p8244521

For your use case, you could do an automated FIFO transfer (to another account) of all the shares older than the ones you want to sell. Then place a FIFO limit order. After the sale, transfer the shares back.

Thank you - your suggestion (transferring out the shares you don't want to sell) makes perfect sense, but I still think selling "unspecified" shares and updating the lots post-sale is easier But please let me know if I'm overlooking anything.

[White Coat Investor]

I just received this email from Vanguard. I always use SpecID to select the shares of the ETFs I want to sell and then use limit orders (especially during volatile times) to avoid being stuck with a bad market order price. Anyone have ideas for what the best course of action would be now?

Email reads in part:

"Effective January 2025, we're updating our method options for non-market orders (limit orders, stop orders, stop-limit orders). When submitting a non-market order, you'll need to elect a non-SpecID method. This change is part of our ongoing efforts to enhance the client experience, better align with industry standards, and streamline the trading process.
.....

When placing a non-market order, you'll choose a cost basis method from the following options:

FIFO (first in, first out).
MinTax (minimum tax).
HIFO (highest in, first out)"

No big deal for me. I learned long ago that market orders are way smarter for the stuff I own like VTI, VXUS etc. especially given how rarely I transact. Wish I could instantly put stuff in the DAF too at market price but that pricing seems much more random when it transacts a few days later.

Why do you guys do so many limit orders? Have you tried market orders and had some sort of issue? Or is it all theoretical/hypothetical?

[talzara]

They say:

"Why are we making this change?
Leveraging other methods for non-market trades enhances the ease to execute your trade and ensures you have an accurate inventory of available lots for trades placed during the time your non-market order remains open."

I don't know what they mean by this.

An example of what they mean: you place a limit order to sell specific shares, then before that is triggered you do market order to sell the same shares.

Fidelity "ensures you have an accurate inventory" by not allowing you to place an order to sell the same shares. When you place a new order, you can only select lots that you haven't already selected for pending orders.

What Fidelity is doing "enhances the ease to execute your trade." What Vanguard is doing is making it more difficult.

[talzara]

Interactive Brokers allows for lot specific trades of any sort. You can also change the lots later on until the trade settles. This is just one more nail in the coffin - I'm in the process of closing out my after-tax account. Roth IRA's have already been moved.

2) Alternatively, you can initiate a limit order using another cost method, and then call Vanguard trade desk and update the lots prior to settlement.

Interactive Brokers allows you to specify lots using software. You just click on the lots to assign them to trades.

You have to call Vanguard to do the same thing. How long do you have to wait on hold? Since you're reading lots to them over the phone, how often will they make errors that will have to be corrected later?

Most Interactive Brokers customers are active traders. They don't have time to specify lots before the trade, so they do it after the trade. This also makes the software easier since all the orders have already executed. Interactive Brokers doesn't have to prevent customers from selling the same lot twice because they're just selling a number of shares.

[talzara]

No big deal for me. I learned long ago that market orders are way smarter for the stuff I own like VTI, VXUS etc. especially given how rarely I transact. Wish I could instantly put stuff in the DAF too at market price but that pricing seems much more random when it transacts a few days later.

Why do you guys do so many limit orders? Have you tried market orders and had some sort of issue? Or is it all theoretical/hypothetical?

The OP already explained last month that they were getting bad fills on market orders: viewtopic.php?p=8208944#p8208944

[whatisyourname]

I experienced exactly the same problem. A workaround is to place a limit order with any of the method, then after the order is executed but before it is settled, go to the order status page, find the order and edit, you should be able to edit the lot there. I did not try this yet but this should work, as I was told by their customer service representative about this.

To all who responded in this thread:
- I received the email from Vanguard but I did not noticed until OP mentioned this then I found it in my inbox
- specifying the same lot more than once in the same day: I *think* I did this once or twice in 2023 as I was doing tax gain harvesting. At that time there was no such warning and this resulted in FIFO and created wash sale. It caused me extra time when filing my tax return. I sent a complaint via secure message and the one answering my question did not know anything. But in 2024 I noticed such warning and I think that is likely they found that.
- I never place market order: if you want to choose specific lots, there is a reason and market order does not give you any guarantee about the price and you may end up in unpleasant situation (such as wash sale). As said by others in this thread, you can always place a marketable limit order with aggressive price.
- I do not trade frequently, but I had situation when I want to harvest loss or gains and it is important to select specific lots.
- I used several brokerage firms and they all support choose specific lots when placing a limit order, as of now.

It is very frustrated that Vanguard uses this way to deter its clients: their UI already discourages users from frequent trading and I do not understand why they added this restriction on specID. I did not mind too much about their UI since most of my trading happened in accounts in other brokerage firms and my vanguard is mostly a buy and hold account. There is a workaround for this specID so this is not a showstopper to me but this really makes me think whether I should move away from Vanguard brokerage.

Doing this while claiming "enhance the client experience, better align with industry standards, and streamline the trading process" is a lie. I am very curious who in Vanguard really believes that and this makes me question their professionalism. I love the fact that Vanguard keep pushing for low expense ratio, but I'll be equally, if not more, happy if they keep the current ER, or even increase a few bps if they could improve their system themselves.
Anyone knows whether Vanguard outsource all of its IT system, including product design, implementation, and maintenance?

[snookslayer]

So all our accounts have fully migrated to Fidelity and only 1 of them is still waiting on the cost basis be updated. Few observations post Vanguard amputation.

1. Finally got a call back from someone at Van who was able to do more than read a patronizing cue card about how this new 'feature' was enhancing my experience. Apparently after pulling 6 accounts all with the same last name it crossed someone's desk enough to care, but there is no resolution. He understood and said he's had more than a few discussions with unhappy clients. Thanked him and wished him well.

2. After just accepting my bank transfers from Van would always take 3+ days I'm surprised to find same day processing with Fidelity. I just received a few divs yesterday morning and when they hit my Fido account I sent them to my bank and they showed up last night after dinner. My test transfers once EFT was set up were also same day for inbound and outgoing.

3. Fido average wait time for CS is under 1 minute. A single voice verification, stating question for call and then I'm talking with someone in well under 1 minute. No more messing around with multiple questions from the Vanguard prompts only to be sent to the wrong department, put on hold b/c they don't know the answer and spending an eternity to get anything done. Fido reps are so nice and so far have exceeded Van's knowledge base by a landslide. Never had to be transferred b/c someone didn't know something so I'd estimate my 3 calls to Fido have all been 3 minutes max from dialing to hang up.

4. The web experience CRUSHES Vanguard's antiquated system and it's not even close. Especially when choosing tax lots and I can see my cost basis from any screen within my portfolio views. The cash management and different ways to customize my views of dividends, accounts and coms are so streamlined. If you do any trading you will love Active Trade Pro.

So, for anyone considering a move all I can say is I wish I'd of done it years ago. Have yet to find one single thing Fido doesn't do at least as well as Vanguard, but several where Fido is significantly better. Over 3 decades at Vanguard and it was just easy b/c I was lazy, but ultimately they made the decision for me.

[rkhusky]

2. After just accepting my bank transfers from Van would always take 3+ days I'm surprised to find same day processing with Fidelity. I just received a few divs yesterday morning and when they hit my Fido account I sent them to my bank and they showed up last night after dinner. My test transfers once EFT was set up were also same day for inbound and outgoing.

That's odd. Mine never took more than 2 days and now they show up at my bank in 1 day.

And I never have a need to call Vanguard. If you like to call frequently, then you are better off at Fidelity.

[snookslayer]

2. After just accepting my bank transfers from Van would always take 3+ days I'm surprised to find same day processing with Fidelity. I just received a few divs yesterday morning and when they hit my Fido account I sent them to my bank and they showed up last night after dinner. My test transfers once EFT was set up were also same day for inbound and outgoing.

That's odd. Mine never took more than 2 days and now they show up at my bank in 1 day.

And I never have a need to call Vanguard. If you like to call frequently, then you are better off at Fidelity.

Vanguard transaction limits on bonds/munis require phone calls. I'm not an index/ETF passive retiree I hold mostly bonds, a few preferred/baby bonds and tax free munis.

I found it no coincidence the larger my balances grew over the years the slower my money would make it to my bank.

[rkhusky]

That's odd. Mine never took more than 2 days and now they show up at my bank in 1 day.

And I never have a need to call Vanguard. If you like to call frequently, then you are better off at Fidelity.

Vanguard transaction limits on bonds/munis require phone calls. I'm not an index/ETF passive retiree I hold mostly fixed income from preferred to baby bonds to tax free munis.

I'm mutual fund only, so low maintenance. The larger my balance grew the faster it made it to my bank.

And I trust Vanguard more for my wife and me when my faculties decline. Fidelity is too predatory for my taste.

[snookslayer]

Vanguard transaction limits on bonds/munis require phone calls. I'm not an index/ETF passive retiree I hold mostly fixed income from preferred to baby bonds to tax free munis.

I'm mutual fund only, so low maintenance. The larger my balance grew the faster it made it to my bank.

hey good for you glad it's working that's all that matters glad you have had good experiences.

[White Coat Investor]

No big deal for me. I learned long ago that market orders are way smarter for the stuff I own like VTI, VXUS etc. especially given how rarely I transact. Wish I could instantly put stuff in the DAF too at market price but that pricing seems much more random when it transacts a few days later.

Why do you guys do so many limit orders? Have you tried market orders and had some sort of issue? Or is it all theoretical/hypothetical?

The OP already explained last month that they were getting bad fills on market orders: viewtopic.php?p=8208944#p8208944

Not sure discovering there is a spread qualifies as "bad fills".

[talzara]

Not sure discovering there is a spread qualifies as "bad fills".

The OP could've split the spread with a limit order. Many people would rather wait for a better price.

A market order doesn't give you the choice between speed and price. You're buying at the ask and selling at the bid.

[chinchin]

A board member just posted that Vanguard has discovered systemic errors related to SpecID trades:

viewtopic.php?f=1&t=450148

Specifically, we determined that, in limited circumstances, your Specific Identification (“SpecID”) instructions were not fully honored as intended. Instead, due to an inadvertent system issue, one or more lots that you selected via SpecID was replaced with the lot that would have been selected using a default method such as First-In, First-Out (“FIFO”).

[White Coat Investor]

Not sure discovering there is a spread qualifies as "bad fills".

The OP could've split the spread with a limit order. Many people would rather wait for a better price.

A market order doesn't give you the choice between speed and price. You're buying at the ask and selling at the bid.

I understand how they work. I just don't find much benefit in limit orders for the extraordinarily liquid ETFs I rarely transact with. In fact, I had the opposite problem back when I tried to use limit orders. I'd put it in and then the price would climb and climb and climb and I'd have to put another order in and another one in and eventually I ended up transacting at something way higher than I ever would have gotten with a market order.

[talzara]

I understand how they work. I just don't find much benefit in limit orders for the extraordinarily liquid ETFs I rarely transact with. In fact, I had the opposite problem back when I tried to use limit orders. I'd put it in and then the price would climb and climb and climb and I'd have to put another order in and another one in and eventually I ended up transacting at something way higher than I ever would have gotten with a market order.

A limit order gives you a trade-off between price and speed. If you want speed at any cost, then you need to enter a limit order for higher than the ask. For example, Robinhood and other brokerages convert customer market orders to limit orders at 105% of the last trade. It's explained in the Matt Levine column that I quoted in my previous post: viewtopic.php?p=8212708#p8212708

If you're entering limit orders at the ask, then you're saying that you don't want speed at any cost. You want speed, but not at the cost of paying more than the ask at the time you submitted the limit order. It's not the limit order's fault that it did exactly what you asked for.

What you're doing is like setting the speed limiter on a car to 60 mph and then complaining that the car won't let you drive 65 mph. It's not the car's fault that you set the speed limiter to 60 mph. If you want to drive 65 mph, then set it to 65 mph or higher.

[White Coat Investor]

I understand how they work. I just don't find much benefit in limit orders for the extraordinarily liquid ETFs I rarely transact with. In fact, I had the opposite problem back when I tried to use limit orders. I'd put it in and then the price would climb and climb and climb and I'd have to put another order in and another one in and eventually I ended up transacting at something way higher than I ever would have gotten with a market order.

A limit order gives you a trade-off between price and speed. If you want speed at any cost, then you need to enter a limit order for higher than the ask. For example, Robinhood and other brokerages convert customer market orders to limit orders at 105% of the last trade. It's explained in the Matt Levine column that I quoted in my previous post: viewtopic.php?p=8212708#p8212708

If you're entering limit orders at the ask, then you're saying that you don't want speed at any cost. You want speed, but not at the cost of paying more than the ask at the time you submitted the limit order. It's not the limit order's fault that it did exactly what you asked for.

What you're doing is like setting the speed limiter on a car to 60 mph and then complaining that the car won't let you drive 65 mph. It's not the car's fault that you set the speed limiter to 60 mph. If you want to drive 65 mph, then set it to 65 mph or higher.

Buying with a limit order higher than the current price is basically just putting in a market order as near as I can tell. What difference do you see in that?

[typical.investor]

A limit order gives you a trade-off between price and speed. If you want speed at any cost, then you need to enter a limit order for higher than the ask. For example, Robinhood and other brokerages convert customer market orders to limit orders at 105% of the last trade. It's explained in the Matt Levine column that I quoted in my previous post: viewtopic.php?p=8212708#p8212708

If you're entering limit orders at the ask, then you're saying that you don't want speed at any cost. You want speed, but not at the cost of paying more than the ask at the time you submitted the limit order. It's not the limit order's fault that it did exactly what you asked for.

What you're doing is like setting the speed limiter on a car to 60 mph and then complaining that the car won't let you drive 65 mph. It's not the car's fault that you set the speed limiter to 60 mph. If you want to drive 65 mph, then set it to 65 mph or higher.

Buying with a limit order higher than the current price is basically just putting in a market order as near as I can tell. What difference do you see in that?

I do see a potential benefit especially with lower volume ETFs. With a market order, a broker could route your order to the exchange of their choice. Then, if you have an odd lot which we know doesn’t necessarily get the "national best bid and offer" (NBBO) price, you may have set yourself up to accept whatever price the trader on that exchange is willing to trade at. A limit is better I think.

Of course, there won’t be a huge loss for a less than best price on less than 100 shares but still.

[White Coat Investor]

Buying with a limit order higher than the current price is basically just putting in a market order as near as I can tell. What difference do you see in that?

I do see a potential benefit especially with lower volume ETFs. With a market order, a broker could route your order to the exchange of their choice. Then, if you have an odd lot which we know doesn’t necessarily get the "national best bid and offer" (NBBO) price, you may have set yourself up to accept whatever price the trader on that exchange is willing to trade at. A limit is better I think.

Of course, there won’t be a huge loss for a less than best price on less than 100 shares but still.

Sure, but I don't invest in those and I suspect few Bogleheads do. We're buying VTI and VXUS and BND etc.

I used to worry about this too. But my life got a lot easier when I quit messing with limit orders.

[edge]

Marketable limit order seems like the basic solution. VG is accumulating too many UX annoyances imo.

I do see a potential benefit especially with lower volume ETFs. With a market order, a broker could route your order to the exchange of their choice. Then, if you have an odd lot which we know doesn’t necessarily get the "national best bid and offer" (NBBO) price, you may have set yourself up to accept whatever price the trader on that exchange is willing to trade at. A limit is better I think.

Of course, there won’t be a huge loss for a less than best price on less than 100 shares but still.

Sure, but I don't invest in those and I suspect few Bogleheads do. We're buying VTI and VXUS and BND etc.

I used to worry about this too. But my life got a lot easier when I quit messing with limit orders.

[typical.investor]

I do see a potential benefit especially with lower volume ETFs. With a market order, a broker could route your order to the exchange of their choice. Then, if you have an odd lot which we know doesn’t necessarily get the "national best bid and offer" (NBBO) price, you may have set yourself up to accept whatever price the trader on that exchange is willing to trade at. A limit is better I think.

Of course, there won’t be a huge loss for a less than best price on less than 100 shares but still.

Sure, but I don't invest in those and I suspect few Bogleheads do. We're buying VTI and VXUS and BND etc.

I used to worry about this too. But my life got a lot easier when I quit messing with limit orders.

Fair enough, but I suspect that there are enough Bogleheads who do use municipal bond ETFs, small value or even Vanguard total market funds that trade on foreign exchanges in various currencies so don't have as much liquidity so as to make mentioning it worthwhile. And lots of Bogleheads trade in odd lots.

Marketable limit orders really don't add much complexity or take time.

[talzara]

Buying with a limit order higher than the current price is basically just putting in a market order as near as I can tell. What difference do you see in that?

That has also been discussed already in this thread. A limit order is much less vulnerable to flash crashes. You will still get a bad fill, but no worse than the limit you set. viewtopic.php?p=8209659#p8209659

In addition to flash crashes, there are also order entry mistakes by large traders. Those will not get rolled back because it's not a market disruption. It's just someone entering the wrong price.

A marketable limit order is just like a market order -- except when things go wrong. Then it's not like a market order.

Market orders are dangerous because they always execute, no matter what the price is. That's why some retail brokerages never send market orders to the exchanges. If a customer enters a market order, they convert it to a marketable limit order. Instead of following this best practice, Vanguard is making limit orders worse.

[grabiner]

Buying with a limit order higher than the current price is basically just putting in a market order as near as I can tell. What difference do you see in that?

If it isn't too much higher, it protects against a bad fill if the current ask is withdrawn or filled by another trader first.

When I first bought VSS, I had one time that I saw a bid of $51.70 and an ask of $51.76. However, I refreshed the quote before placing my order and saw a bid of $51.71 and an ask of $53.77. If I had placed a market order, it would have been accepted at $53.77 (and I saw in the daily chart that this happened to someone on the following day). If I had placed a limit order at $51.77, it would have become the new bid, and been accepted when the expected $51.77 sell order was placed a few seconds later. If I had placed a limit order at $51.76, it would have become the new bid, and remained the new bid unless someone accepted it or the market moved. (It happened that the market went back down, so $51.76 would have been accepted a few minutes later. But if the market went up instead of down, I could then reprice my order to buy at a new ask of, say, $51.82.)

[XdUzHa3NtSeIkBkIGPVn]

I experienced exactly the same problem. A workaround is to place a limit order with any of the method, then after the order is executed but before it is settled, go to the order status page, find the order and edit, you should be able to edit the lot there.

This is the right answer at the moment.

I never got Vanguard's email and just tried to do a limit+SpecId order. I can confirm that this works, and no need to contact CS.

I don't find convincing the idea of specifying the same lot on two different orders (limit+market) being a problem. As others said, they could just hide lots already in an open order, or let you pick them but take them out of the limit order, with a warning message.

The best case I can think of for removing the feature is that, if there's a partial execution, the system wouldn't know how to prioritize which lots are sold first. Still not enough of a reason in my opinion. And theoretically you could have partial execution on a market order if the volume is extremely thin.

[urban]

And theoretically you could have partial execution on a market order if the volume is extremely thin.

Is it even theoretically possible on a market order? That what market makers are for - to ensure liquidity to the market. They step in and take the other side of the trade if necessary.

[XdUzHa3NtSeIkBkIGPVn]

And theoretically you could have partial execution on a market order if the volume is extremely thin.

Is it even theoretically possible on a market order? That what market makers are for - to ensure liquidity to the market. They step in and take the other side of the trade if necessary.

Only on extremely low volume securities. If the whole order book only has 1000 shares and you place a market order for 2000, it's not going to be executed fully. I'm not even sure what happens with the rest of the order at that point. This is of course a moot point for the vast majority of people that don't trade very obscure securities.

With regards to the post-trade cost basis edit workaround: It looks like this workaround is gone now. It was working Wednesday, but now all the options I get is FIFO, HIFO, and MinTax.

[barnhowl]

I just received this email from Vanguard. I always use SpecID to select the shares of the ETFs I want to sell and then use limit orders (especially during volatile times) to avoid being stuck with a bad market order price. Anyone have ideas for what the best course of action would be now?

Email reads in part:

"Effective January 2025, we're updating our method options for non-market orders (limit orders, stop orders, stop-limit orders). When submitting a non-market order, you'll need to elect a non-SpecID method. This change is part of our ongoing efforts to enhance the client experience, better align with industry standards, and streamline the trading process.
.....

When placing a non-market order, you'll choose a cost basis method from the following options:

FIFO (first in, first out).
MinTax (minimum tax).
HIFO (highest in, first out)"

No big deal for me. I learned long ago that market orders are way smarter for the stuff I own like VTI, VXUS etc. especially given how rarely I transact. Wish I could instantly put stuff in the DAF too at market price but that pricing seems much more random when it transacts a few days later.

Why do you guys do so many limit orders? Have you tried market orders and had some sort of issue? Or is it all theoretical/hypothetical?

Using a marketable limit order mitigates a bad fill during a flash crash.
However unlikely that might be, it has psychological value.

[whatisyourname]

Is it even theoretically possible on a market order? That what market makers are for - to ensure liquidity to the market. They step in and take the other side of the trade if necessary.

Only on extremely low volume securities. If the whole order book only has 1000 shares and you place a market order for 2000, it's not going to be executed fully. I'm not even sure what happens with the rest of the order at that point. This is of course a moot point for the vast majority of people that don't trade very obscure securities.

With regards to the post-trade cost basis edit workaround: It looks like this workaround is gone now. It was working Wednesday, but now all the options I get is FIFO, HIFO, and MinTax.

Do you mean now before the settlement, you will not be able to choose specific lots?
Maybe vanguard is watching this board and trying their best to fix this bug/feature just to make our life more difficult to show their IT is really doing something?