How do I place an order?

 

A number of factors can influence how you place ETF orders and when you should call your block desk for assistance.

Here are two common scenarios, along with some practical tips that will help you place ETF orders quickly and confidently.

 

Scenario 1: You want to execute your trade right away

Whether you want to lock in a current market price, avoid adverse market movements, or simply execute your daily trades and tackle other priorities, the key to determining your trading approach is understanding the effect of trading volume.

If the ETF you want to trade has a high average daily volume (ADV)—generally more than two million shares a day—you can execute a simple limit order through your trading site. However, when you want to place an order for an ETF with a low ADV, it may be better to call your block desk. Ask for a market order from your block-desk representative for the number of shares you want to trade, and he or she will provide bid and offer prices for the trade size.

Keep in mind that your block desk has access to an extensive network of liquidity providers that can help place your order and execute your trade, especially in low-volume situations.

 

Scenario 2: You want to work an order over time

When your objective is to place an order for the best possible average trade price over a period of time and the ETF in question is trading at a high ADV, your best option is to have the block desk work the ETF order.

When your objective is the same, but the ETF is trading at a low ADV, your block desk can assist with more sophisticated order and execution strategies, including:

  • Time-weighted average pricing (TWAP), which provides an average price of a security over the course of a specified time.
  • Volume-weighted average pricing (VWAP), which provides an average price of a security based on its trading volume across various price points.  

TWAP and VWAP orders ensure your trade will be executed not at the lowest or the highest price but at an average of the two during the specified period of time.

Be aware of special circumstances

There are occasions when executing a large order for an ETF may have a market impact. Under this circumstance, your block desk can be especially helpful by transacting with multiple brokers and generating a level of trading competition that can result in a favorable trade.

Note: Advisors should consult their block desks for available order types, since they may differ than those discussed in the section.

All investing is subject to risk, including possible loss of principal.

Vanguard ETF Shares are not redeemable with the issuing Fund other than in very large aggregations worth millions of dollars. Instead, investors must buy and sell Vanguard ETF Shares in the secondary market and hold those shares in a brokerage account. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling.

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