Stock and ETF brokerage costs plunge

Discussion of the Stock portion of the Permanent Portfolio

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pugchief
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Re: Stock and ETF brokerage costs plunge

Post by pugchief » Mon Oct 21, 2019 8:45 pm

ochotona wrote:
Mon Oct 21, 2019 2:56 pm
InsuranceGuy wrote:
Mon Oct 21, 2019 11:33 am
Are MOC that big of a deal? I could see if you bought stocks and you wanted to buy or sell at close in anticipation of an earnings move, but if you are trading ETFs why not just sell 30 minutes before close and then buy your new shared fast following?
I just don't want to be exposed to that whole "selling the customer's order flow" thing. That's just sleazy and creepy.

Very interesting, the Schwab rep just told me my IRA is NOT set up for margin trading, but I have placed a simultaneous MOC sell and buy order at Schwab, that was something definitely Fidelity could not do. With Fidelity, I'd have to wait until the next day to do the second leg of the trade. (bzzzzt) No good at all for the way I want to trade. When I get a momentum signal to move a large part of the portfolio, I want to do it in one go, get the exact closing price, not have my large order sold, not be exposed to bid-ask spread.

Sorry, FIDELITY Visa card.
By law, IRAs and 401ks are never margin accounts, always cash. So if you're doing it in a tax-deferred account, you are lucky they allow simultaneous orders like that. I think Fidelity's policy is more typical. That being said, Fido does occasionally have some weird rules.

Now what you can do at Fido is 'exchange' one mutual fund for another simultaneously and automatically always at the close. SInce they now have several ZERO expense ratio funds and plenty of super-low ER ones as well, maybe that would work better for you?
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mathjak107
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Re: Stock and ETF brokerage costs plunge

Post by mathjak107 » Tue Oct 22, 2019 2:59 am

i have what is called a limited margin account at fidelity on my ira . Limited margin----------
Allows you to trade on unsettled funds and trade without triggering trading restrictions, such as good faith violations, in an IRA1
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Re: Stock and ETF brokerage costs plunge

Post by foglifter » Tue Oct 22, 2019 11:47 am

mathjak107 wrote:
Tue Oct 22, 2019 2:59 am
i have what is called a limited margin account at fidelity on my ira . Limited margin----------
Allows you to trade on unsettled funds and trade without triggering trading restrictions, such as good faith violations, in an IRA1
From my experience FIdelity allows trading with unsettled funds in regular brokerage as well as IRA accounts, although the good faith rules are still enforced (sounds like this is the biggest difference you experience in your limited margin account). Be it a just-initiated deposit from the bank or proceeds from a sale I can place buy orders on the same day.
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Re: Stock and ETF brokerage costs plunge

Post by foglifter » Tue Oct 22, 2019 11:50 am

pugchief wrote:
Mon Oct 21, 2019 8:45 pm
Now what you can do at Fido is 'exchange' one mutual fund for another simultaneously and automatically always at the close. SInce they now have several ZERO expense ratio funds and plenty of super-low ER ones as well, maybe that would work better for you?
Yes, this is a neat feature at Fido. Just need to keep in mind that the "real" same-day exchange works only when both the old and new fund are Fidelity funds. Otherwise the buy order would be executed a day later.
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Re: Stock and ETF brokerage costs plunge

Post by mathjak107 » Tue Oct 22, 2019 12:02 pm

Keep in mind that the fidelity zero expense funds follow their own index not the standard ones like s&p or Wilshire. They would have to pay to use the standardized indexes so they created their own ...I own fzrox and it is pretty close
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Re: Stock and ETF brokerage costs plunge

Post by pugchief » Tue Oct 22, 2019 12:36 pm

foglifter wrote:
Tue Oct 22, 2019 11:50 am
pugchief wrote:
Mon Oct 21, 2019 8:45 pm
Now what you can do at Fido is 'exchange' one mutual fund for another simultaneously and automatically always at the close. SInce they now have several ZERO expense ratio funds and plenty of super-low ER ones as well, maybe that would work better for you?
Yes, this is a neat feature at Fido. Just need to keep in mind that the "real" same-day exchange works only when both the old and new fund are Fidelity funds. Otherwise the buy order would be executed a day later.
I don't think that is accurate. If you place a buy order for a non-fidelity fund, you get the closing price that day. Why would an exchange be any different?
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Re: Stock and ETF brokerage costs plunge

Post by foglifter » Tue Oct 22, 2019 12:49 pm

pugchief wrote:
Tue Oct 22, 2019 12:36 pm
foglifter wrote:
Tue Oct 22, 2019 11:50 am
pugchief wrote:
Mon Oct 21, 2019 8:45 pm
Now what you can do at Fido is 'exchange' one mutual fund for another simultaneously and automatically always at the close. SInce they now have several ZERO expense ratio funds and plenty of super-low ER ones as well, maybe that would work better for you?
Yes, this is a neat feature at Fido. Just need to keep in mind that the "real" same-day exchange works only when both the old and new fund are Fidelity funds. Otherwise the buy order would be executed a day later.
I don't think that is accurate. If you place a buy order for a non-fidelity fund, you get the closing price that day. Why would an exchange be any different?
This is accurate. Here's an explanation from the Fidelity website:

When will this mutual fund be purchased?

When using the proceeds of the sale of a mutual fund to purchase another mutual fund, the purchase occurs on the settlement date of the sale as follows:

Mutual Funds in the Same Family
The settlement date for the sale is the same as the trade date. Therefore, the purchase takes place on the same date as the sale. On the sale and purchase of funds, you will receive the next available price.

Mutual Funds in Different Families
The settlement date for the sale is one business day later than the trade date. Therefore, the purchase takes place on the next business day following the sale. On the sale of your mutual funds, you will receive the next available price, and on the purchase of your mutual funds, you will receive the next business day's price.
This order first appears as a single order identifying both the sell and the buy. You can attempt to cancel the entire order before the sale executes. When the sell executes, the order will appear as a separate sell and buy order. After the sell order has executed, you can only attempt to cancel the buy order up until the buy order executes.

Some funds may not be eligible for either type of purchase due to longer settlement periods.
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Re: Stock and ETF brokerage costs plunge

Post by pugchief » Tue Oct 22, 2019 1:21 pm

Thanks for clarifying. I learned something new today.
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Re: Stock and ETF brokerage costs plunge

Post by ochotona » Tue Oct 22, 2019 4:21 pm

I tried the mutual funds, then got a nastygram from Schwab for excessive trading in mutual funds. My momentum stuff does trade a few times per year, on average. Too many times for Schwab!

VERY INTERESTING TODAY... I sold some SCHX shares at Fidelity. I got dinged about 1/2 penny relative to the posted prices at the time. Then 15 sec before the close, I bought BIL (T-Bills ETF). I got dinged about 1/2 penny per share again relative to the closing price. I think it's the halfway point between bid and ask.. which were separated by a penny. They can be no closer than a penny, they can't be zero. They can be much yuuuger than a penny.

I am going to buy and sell, buy and sell BIL until I have satisfied my curiosity about trade friction. I'll do it at Fidelity, then at Schwab.

Why BIL? It's the least volatile ETF out there.
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Re: Stock and ETF brokerage costs plunge

Post by ochotona » Fri Oct 25, 2019 10:20 pm

Ahhhh.... I have to yank the Roth back to Schwab. If I straddle Schwab and Fidelity, I can't do Roth conversions easily at no cost.
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Re: Stock and ETF brokerage costs plunge

Post by ochotona » Wed Nov 06, 2019 6:46 pm

I have figured out how to place simultaneous MOC buy and sell orders without getting into trouble. Trouble = negative cash balance. Schwab will make the trades, but they you'll have a negative cash balance and a trading violation, and you have to sell something really quick to raise cash. They you get a nastygram. I have done it accidentally in the past; once I was required to have settled cash for 90 days. Facing the corner with dunce cap on.

So to avoid all of this, let's say you're selling 1000 shares of XYX, it's very easy to find last 5 day high and low prices. So you assume you're going to get 100 * (the low price) from the sale.

Then on the buy side, you assume you'll buy at the high price per share from the last 5 days. So you size the buy that way. And then maybe buy 1% less just to be sure.

The odds of exhausting your cash would be small.

Let's say you ended up buying shares and you have money left over. Place a limit order to buy at or below the closing price the next day; pretty good odds it will trade over the next few days. If not, you can turn it into a market order.

What I just described - Fidelity won't let you do.
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