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section header ETF fundamentals

subsection header Trading

Common order types

ETFs allow you to place any type of trade that you would with equities.

Here are some common order types:

Market order

An order to buy or sell immediately at the best available price in the market at the time the order is executed. When you place a market order, your priority is completing the trade quickly, without securing a particular price.

Limit order

An order to buy or sell at a chosen price that will be executed only if units are available at that price or better. Limit orders protect you from executing a trade at an undesirable price. When you place a limit order, your priority is securing a certain price, not speed of execution. The risk with a limit order is that the market may never reach the limit, and your order may not be executed.

Marketable limit order

An order to buy at a chosen price greater than the best available price in the market, or to sell at a chosen price that is less than the best available price in the market. This increases the chance that your order will be executed, while also providing greater price certainty. If a better price is available at the time your order is executed, best execution obligations will ensure you receive any price improvement available in the market.

Stop order

You set a price—the stop price—at which you will automatically buy or sell. If the market reaches the stop price, your stop order becomes a market order, executing at the best available price in the market. That price may have changed, for better or worse, in the moments after your stop price triggered your market order. When you place a stop order, your priority is trying to limit a loss or protect a profit, without any guarantee of securing a particular price.

Stop-limit order

Similar to a stop order, but in addition to setting a stop price, you also set a limit price. If the market reaches the stop price your stop order becomes a limit order, at the limit price you specified. When you place a stop-limit order, your priority is trying to limit a loss or protect a profit without the unpredictability of a market order.


Your ETF trading desk can help

An ETF trading desk, if one is available to you, can use its trading tools and network of relationships to help you when you place a large order. Your ETF trading desk may be able to:

  • Review the depth of interest in an ETF before placing a trade. You may be able to determine from your trading screen only how many units are available at the best-bid and best-ask prices. Your ETF trading desk can evaluate additional availability of units.
  • Implement different trading strategies to manage the market impact of large trades.
  • Provide additional liquidity by creating or redeeming ETF units, if your broker is an authorized dealer.
  • Obtain an indicative quote to execute the entire trade.

A Vanguard sales representative is a good starting point for a discussion about ETF liquidity, and can connect you with one of our ETF capital markets specialists. The specialist can access additional data on the depth of liquidity, suggest trading execution strategies, connect you with liquidity providers, and address any other questions you might have about trading.

For larger trades, the specialist can consult with market makers to help you maximize potential liquidity in the ETF. The Vanguard capital markets specialist will know whether your requested trade size is large enough to engage a market maker or whether liquidity is naturally available for your order. A large order for one product may not be a large order for another.


Learn the basics of ETFs, including their history, how they compare to mutual funds, what types are available and more.


Learn about the different types of exchange-traded products, how index and active ETFs are managed and more.


Learn about strategic and tactical uses for ETFs, including asset and sub-asset allocation, portfolio completion, cash equitization and more.

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This material is for informational purposes only. This material is not intended to be relied upon as research, investment, or tax advice and is not an implied or express recommendation, offer or solicitation to buy or sell any security or to adopt any particular investment or portfolio strategy. Any views and opinions expressed do not take into account the particular investment objectives, needs, restrictions and circumstances of a specific investor and, thus, should not be used as the basis of any specific investment recommendation. Investors should consult a financial and/or tax advisor for financial and/or tax information applicable to their specific situation.

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