"Trading" Vanguard or Fidelity ETFs instead of Individual Equities?

[stephenson]

Many of you will have seen my recent thread about moving 401Ks to either Vanguard and/or Fidelity.

As I was considering all the great feedback, it occurred to me that in addition to trading stocks occasionally, I might also like to trade ETFs in like manner - I would only do this with a small portion of IRA assets.

I would appreciate comments from those that are doing this and in particular, what kind of tools and processes you use - what your considerations and metrics are for moving into and out of an ETF - whether you find Vanguard or Fidelity or some other fund company as the best/easiest/fastest etc platform for doing it (perhaps TD Ameritrade?).

Thanks to All!

 

[LOL!]

I have been day-trading VTI (total stock market index) the past week using my WellsTrade (no commissions) and TDAmeritrade (no commissions) tax-advantaged accounts.

I only do one kind of trade: Buy VTI when the news is good and it starts an uptrend. So for instance, today around 10 am, I bought VTI. Then in a different account, I submitted a limit order to sell VTI for a higher price than I just bought it at and I pocket the difference. At the end of the day, I have no change in my overall holdings. Basically, I am "doubled-up" for a few hours.

I have access to to 5 accounts when one includes Roth, trad, taxable, and two or three financial institutions. Thus, I can let the trades settle in 3 days and use a different pair of accounts in the mean time.

Another thing I do is buy in a taxable account and sell in a tax-advantaged account. For instance, if VTI pops and I think it is going to go down, then I will buy in my taxable account and sell in my Roth IRA. That way if it does go down, then I will get to harvest the loss and the Roth IRA does not lose money. If it goes up, then so what, I have made money in my taxable account.

So with using different accounts, I do not need margin, I do not get slapped with a free-riding restriction, I pay no commissions, and I do not get hit with frequent trading restrictions. Also I do not make much money doing this since I am usually trading about $25K to $50K at a pop and getting a gain of 0.5% to 1%. I do not make a trade every day as well. I suppose I will stop this day trading in a little while, say after the FOMC meeting next week.

Another thing I do is buy something if it drops big-time in a single day. I will note this in the LOL!'s Market Timing Newsletter thread.

I am trying to stick to my asset allocation plan while doing all this.

Oh, I have a Fidelity account, but no free trades there, so it is unsuitable, but I can submit an exchange from say FUSVX (S&P500) to FSITX (bond index) if I wish to keep my "doubled-up" VTI shares in another account. This way I use the Fidelity account to maintain my asset allocation. However, I cannot switch back in the Fidelity account because of frequent trading restrictions with the Fidelity Spartan index funds.

Added: Note that to get no-commission ETFs with TDAmeritrade one must hold the shares for 30 days or so.

 

[LOL!]

One more thing: It is not hard to make money when everything is going up. That's why I don't do this when things look like they are going down.

 

[utrecht]

This is more in response to LOL's post, not the OP's. LOL! mentioned buying something if it has a big single day drop. For the past 6 months Ive been day trading stocks that make large moves on earnings releases. I always go against the flow. For instance, today American Express released earnings and it opened down about 3%. I bought the stock and rode it back up about .75% and sold. I am almost always out of the trade within 30 mins and usually closer to 5-10 mins. After 6 months, I have a return of almost 20%.

 

[LOL!]

There is one other trade that I might do. Tomorrow I expect the stock market to take a breather and perhaps go down (Yes, I just made a prediction.) If I see the stock market going down in the first hour or so, I will sell VTI because I am now overweight in my equity asset allocation after the past week's run-up of 4%. I will submit an order to buy a corresponding amount of equities in another account to execute at the market close.

At least that's the plan, but if the market reverses after I sell and goes up, then I am screwed.

 

[stephenson]

Wow ...I am looking forward to being able to spend some time each day doing some of this ...I don't yet understand some of the mechanisms, but I'm looking forward to learning!


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[travelover]

Wow ...I am looking forward to being able to spend some time each day doing some of this ...I don't yet understand some of the mechanisms, but I'm looking forward to learning!..............

Don't be lead astray. You'll do much better if you simply set up an asset allocation and rebalance it once a year, around the same date.

 

[LOL!]

I have to agree with travelover on this one.

 

[stephenson]

Travelover ...I understand ...but, I want to "play" a little bit, as well ...I will be doing some light equity trading, as well ..in neither case would I threaten my basic approach and asset allocation within that approach.


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[travelover]

Travelover ...I understand ...but, I want to "play" a little bit, as well ...I will be doing some light equity trading, as well ..in neither case would I threaten my basic approach and asset allocation within that approach.............

Some here have play accounts that are big enough to scratch their testosterone itch, but small enough not to do any real damage.

 

[stephenson]

Said way better than I did


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[mrfeh]

Don't be lead astray. You'll do much better if you simply set up an asset allocation and rebalance it once a year, around the same date.

+1

Just accept what the market gives you.

 

[LOL!]

There is one other trade that I might do. Tomorrow I expect the stock market to take a breather and perhaps go down (Yes, I just made a prediction.)

No clear direction today, so not doing nothing so far.

Update at 3 pm Eastern: I did the trade mentioned since trend looks established: Sell VTI and submit order to buy fund shares at close.