Just an FYI about ETFs for newbies like me who just started ...
Just an FYI about ETFs for newbies like me who just started trading them! I would recommend you create a mental category and rules of engagement for them entirely separate from how you think about stocks.
I quickly learned the hard way that even though ETFs quote pages might look a lot like stock pages in the app, they behave in a completely different way!
For me, the most significant was learning that the "current price" number doesn't really mean much for many ETFs; especially if you want to explore outside the broad index based ones.
Unlike stocks where it's pretty safe to assume there will be at least some trading every day, especially with the more niche ones, ETFs will have a lot fewer trades going on. There may only be a couple of buy and sell orders on the books at a given time - and those prices can be extremely far apart as a result.
I had to retrain how I took in information that it was no longer safe to assume I could buy or sell within say +/- 10% of the listed price. Some ETFs I have looked into have buy /sell orders that are +/- 50%+ of the listed price since that wider gap gets lost in price generation.
Tl;Dr - Before buying into an ETF, be sure the purchase aligns with your goals.
If your intent is to buy, hold and reinvest dividends, look at historical pricing for what cost trades were actually made at. Spend patience instead of money and avoid buying when the only sell orders are inflated prices.
If you want more liquidity in your position focus only on ETFs with relatively high turn over rates. That won't completely remove the risk of having to sell at a considerable loss if the only buy orders are low-ballers, but it will help reduce it.
ETFs aren't for swingers - they are for folks who don't like to risk it. Diversity is the #1 way to promote stability and ETFs let you do that at a much lower upfront cost than creating a diverse portfolio yourself.
I quickly learned the hard way that even though ETFs quote pages might look a lot like stock pages in the app, they behave in a completely different way!
For me, the most significant was learning that the "current price" number doesn't really mean much for many ETFs; especially if you want to explore outside the broad index based ones.
Unlike stocks where it's pretty safe to assume there will be at least some trading every day, especially with the more niche ones, ETFs will have a lot fewer trades going on. There may only be a couple of buy and sell orders on the books at a given time - and those prices can be extremely far apart as a result.
I had to retrain how I took in information that it was no longer safe to assume I could buy or sell within say +/- 10% of the listed price. Some ETFs I have looked into have buy /sell orders that are +/- 50%+ of the listed price since that wider gap gets lost in price generation.
Tl;Dr - Before buying into an ETF, be sure the purchase aligns with your goals.
If your intent is to buy, hold and reinvest dividends, look at historical pricing for what cost trades were actually made at. Spend patience instead of money and avoid buying when the only sell orders are inflated prices.
If you want more liquidity in your position focus only on ETFs with relatively high turn over rates. That won't completely remove the risk of having to sell at a considerable loss if the only buy orders are low-ballers, but it will help reduce it.
ETFs aren't for swingers - they are for folks who don't like to risk it. Diversity is the #1 way to promote stability and ETFs let you do that at a much lower upfront cost than creating a diverse portfolio yourself.
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Investing primarily in bio-tech and drug development; both big pharma for growth and start-ups for speculation
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