5 ways to be a better ETF trader
The rule of thumb among trading experts is to never trade an ETF in the first 15 minutes or the last five minutes of the day, Mr. Rosenberg said. In the first 15 minutes, not every company that’s an underlying holding in the ETF may be trading, making it harder, i.e. costlier, for market makers to price new shares.
“You want to wait till all the underlying shares are trading,” Mr. Rosenberg said.
In the last five minutes, it’s harder for market makers to hedge their bets, which could also lead to a wider bid-ask spread than during the day. And really, if you’re planning to sell something there’s not much reason to wait until the last minute.
“The only reason to wait until the end of the day is if it’s part of your strategy,” Mr. Rosenberg said.
Timing also helps when trading international stocks and bonds. For European stocks or bonds, try to trade earlier in the day while those markets are still open, so you have a clear view of what price you can get. For Asian markets, which aren’t open at all during normal U.S. market hours, it pays to wait until later in the day to get a sense of how the futures markets in those countries are trading.