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https://www.invesco.com/us/qqq-etf/understanding-etf-trading/

Factors to Consider When Trading ETFs

2020-07-06 12:52:33, Ryan T. McCormack QQQ Strategist, Invesco, source

Content Categorization
/Finance/Investing
/Business & Industrial
/News/Business News/Financial Markets News

Word Count:
875

Words/Sentence:
24

Reading Time:
5.83 min

Reading Quality:
Adept

Readability:
13th to 15th

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Historically bid/ask spreads have been higher during the open and close of markets, so investors wishing to lessen the impact of transaction costs might want to avoid trading ETFs during the open and close of an exchange, if possible.

As an example, consider two hypothetical funds, Fund A and Fund B. Fund A has an expense ratio of 20 basis points, while Fund B charges a lower expense ratio of 5 basis points.

Similar to other securities traded on exchanges, ETFs can be traded throughout the day, not just after the market closes – so what times of the day should investors consider trading?

While its high levels of trading and low bid/ask spreads are not necessarily reason alone to consider Invesco QQQ, they are benefits that have historically led to low transaction costs for the ETF.

While market orders guarantee trade execution, a limit or stop order only executes trades at prices determined by the investor ahead of time.

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