A. Here are 3 tips every ETF investors should be aware of:
1. Buy commission-free ETFs
If you trade ETFs frequently, or at least using dollar cost average method to buy ETFs, you might be surprised at how much commission cost could eat into your profit. Fortunately, many large brokerage houses offer a list of ETFs commission-free if you trade them online.
2. Use limit orders
As we have discussed here before, ETF prices could be very volatile and it is always prudent to place your order using limit order (specify your buy or sell price).
3. Pay attention to fair value
ETFs' prices could deviate from their net asset values, when you buy an ETF, you want to avoid paying much more than its NAV, when you sell an ETF, you want to avoid selling at a price that is much lower than its NAV. How to find an ETF's fair value? See our discussion here.