5 ways to be a better ETF trader
Danger: Stop-loss orders
On paper, a stop-loss order sounds like a great idea. It’s a trade that is designed to limit losses by automatically hitting the sell button when the ETF hits a predetermined price. So if you buy an ETF with a share price of $100, for example, and set a stop-loss order of $80, when the ETF’s share price hits that number it will trigger a sell. The problem though, is that when a stop-loss order is triggered it turns into a market order. So if the ETF keeps falling, to say, $75, that could be the price the market order is executed at, Mr. Rosenberg said.
“You really have to understand the impact of the stop-loss order,” he said.