headingout
Recycles dryer sheets
- Joined
- Feb 18, 2008
- Messages
- 147
This past Friday I placed a market order on Schwab for a small amount of VTI (Vanguard's Total Stock Market ETF) at the market open. It was trading in the 60's. I knew it would be a volatile day -- I figured a few percent either way for the total stock market would be the worst case. I'm a long-term investor and didn't care about that kind of fluctuation. But the order executed about 30 minutes later in the 80's! Then VTI immediately dropped back down to the 60's -- a 25% loss right out of the gate!!!
I immediately called Schwab and they agreed it didn't look right and said they'd investigate it. Thinking about this over the weekend, I realized it almost surely had to be a trading error: no way the total market had spiked like that. Indeed, this afternoon, Schwab called back to say the order was cancelled -- some issue with erroneous execution due to specialists being overwhelmed by the volume on Friday. I immediately replaced my order (this time with a limit), it executed at a reasonable price, and all is well in my account.
Lesson learned: even if you aren't a trader, even if you're buying some relatively stable broad index, it may be advisable to use limit orders, especially in these volatile times. This story had a happy ending, but I would have saved myself a lot of anxiety by using a limit order in the first place!
I immediately called Schwab and they agreed it didn't look right and said they'd investigate it. Thinking about this over the weekend, I realized it almost surely had to be a trading error: no way the total market had spiked like that. Indeed, this afternoon, Schwab called back to say the order was cancelled -- some issue with erroneous execution due to specialists being overwhelmed by the volume on Friday. I immediately replaced my order (this time with a limit), it executed at a reasonable price, and all is well in my account.
Lesson learned: even if you aren't a trader, even if you're buying some relatively stable broad index, it may be advisable to use limit orders, especially in these volatile times. This story had a happy ending, but I would have saved myself a lot of anxiety by using a limit order in the first place!