*Note: This post contains screenshots that are no longer relevant. Questrade updated its web platform in the fall of 2021. I am planning on updating all the screenshots in the new year, so check back soon!
It can be intimidating when placing your first ETF purchase. There are buttons and dropdown menus, charts and flashing red or green numbers. Not to mention you are dealing with real money and mistakes have the potential to be costly.
Fear not, my friend, as I am about to guide you through the process of placing your first order with Questrade.
You’ve done all the prep work.
Now you are ready to invest!
But when you log in you freeze at the trading screen…
You wonder: Why do multiple things pop up when I type in my ETF? What’s a market order? A limit order? A stop limit order? Am I going to lose all my money if I click the wrong thing? Am I really cut out for this?
Don’t worry, a lot of features can be ignored as they are intended for people who trade stocks rather than invest in them. And by that, I mean people who engage in speculative trading activities like day or swing trading, which is meant for short-term profit, rather than long-term returns.
I don’t recommend trading on this blog so everything I explain below will be related to long-term DIY investing.
Let’s Get Started Already
Your first order of business is to pull up the quote screen for the ETF you want to purchase.
To do this, type in the ETF’s ticker symbol, which you might already know based on your ETF research.
*Warning*: Sometimes there is more than one option to choose from when you type in a ticker, like in the following image:
In this case I was looking for XEC, the iShares Emerging Markets ETF. You can see there are several options when I type in XEC.
The first column is Questrade’s way of showing which exchange the equity in trading on. Other brokerages might make you select an exchange before typing a ticker and only show options for that apply. With Questrade, anything trading on the TSX (Toronto Stock Exchange) will have .TO after the main ticker symbol as confirmed on the rightmost column.
If there is a letter in between the ticker and .TO it is designating a different class of the same fund, if applicable. This is also how preferred shares would show up for those who are investing in individual stocks. In this case there is a regular XEC fund and US hedged version, which is the XEC.U.TO in Questrade’s interface.
If you don’t know the ticker go back to the fund’s website and find the ticker for the fund you are interested in. You can also confirm which exchange the ETF trades on by looking at the fund info on their website or fact sheets.
The Quote Screen
The quote screen may seem scary at first but a lot of what’s on there can be ignored. Of most interest is the current price right under the ticker symbol and fund name (which is a good time to confirm you are looking at the right fund), as well as the high, low, open and close prices.
The current price is self-explanatory, which will also match the close price if you are looking at this screen outside of market hours.
The high is the highest price and the low is the lowest price that the ETF sold for during market hours. If the market is still open these prices will update if the current price goes past them at any point.
The open is what the ETF sold for as the markets opened up that morning, and the close is what it sold for as the market closed that day. If the markets are still open then the close price will show the previous day’s closing price.
What do all these numbers mean? Not much if you are able to place the order during market hours. If you have to work during market hours or just feel more comfortable placing your order the night before then you can use these numbers to gauge what price you might need to pay in order to acquire the ETF. This would help you figure out how many shares you can buy with a certain amount of money.
For example, if you were wanting to put $5,000 into this ETF that currently trades at $27.41 you would be able to purchase 182 shares for $4,988.62. And if you are using Questrade, you don’t have to pay a commission for this order since they offer commission-free ETF purchases.
To continue, click the green Buy/Sell button next to the ticker and the order tab will open up on the right.
The Order Tab
This tab is where you will place your actual order.
The quantity is the amount of shares you are wanting to order which you may have already calculated like in the example above.
As for order types there are really only two that you need to worry about as a long term investor which are the market order and the limit order. All of the rest are more for speculative trading activities and can be ignored.
The Market Order
A market order is your standard order. It will place your order and guarantee it to go through. What it won’t guarantee is the price that you will pay when the order does go through.
This has the potential to fill your order at either a higher or lower price than you expected, causing you to possibly pay more or have your order cancelled altogether because you didn’t have enough money in your account.
I suggest only using market orders if you are able to place the trade during market hours. This way you will always see what the current price is at.
Markets are typically most volatile when they first open for the day, making the price of a stock or ETF bounce all over the place first thing in the morning.
This can be disappointing for beginners as the quote shows a current price the prior evening when they could be placing their order, yet when the market actually opens all the other orders that came in overnight cause the opening price to be different.
As you can imagine this can give you quite a surprise if the price was higher than you expect.
Let’s go back to the previous example where I was looking to buy $5,000 of XBAL. I chose a market order, punched in out how many shares I could afford, and went on my way.
Hypothetically, there could be a lot of other DIY investors doing the same thing that night which drives the opening price up. When the markets open the next morning XBAL actually costs $27.50 bringing the entire order cost to $5,005.
This could potentially force me out of the order if I only had $5,000 in the account. Or, if you were ordering something more volatile, you could end up throwing quite a bit more capital into that holding than expected.
This is why I suggest using limit orders if you are placing orders outside of market hours.
The Limit Order
A limit order is a way to place an order at a specific price. This has the benefit of knowing what you will be paying, but at the risk of your order not filling.
When you select a limit order, another field opens up allowing you to set the price you are willing to pay. For purchases, this is the maximum price your order will fill it. If the market price is above your limit price, your order will not be filled unless the price comes back down to either your limit price or lower.
This would eliminate the risk of paying more than intended during early market volatility.
There is the chance that your order doesn’t get placed at all, like when the market opens higher than your limit price and stays higher all day.
This is why I would recommend you looking at high and low prices from the quote screen to get a feel for how volatile your equity of interest is over a given day. Then you can pick a limit price that has a good chance of getting filled while preventing yourself from paying more than you expect.
Remember, the limit price is the maximum (for purchases) price you would pay. So if the market opened lower than your limit price your order would get filled at that lower price and you would then end up paying less than expected. Not bad hey?
And of course everything works the opposite way when it’s time to sell. Meaning the limit price will be the lowest price your order will fill it, but it can be higher.
To recap, market orders guarantee your fill, but not the price you pay and a limit order will guarantee the (maximum for purchases, min for selling) price, but not the fill.
Order duration gives you some options for how long to keep your order “in the market” waiting to be filled. This is not a concern for market orders as they guarantee your fill and therefore do not wait to be filled.
The options for order duration are:
- Day – This will only have your order active till the end of the trading day
- Good Till Date – You will be able to specify a date until which your order will stay active
- Good Till Cancelled – Your order will stay active until you decide to cancel it
The rest of the options available in Questrade’s order tab or more for trading activities than investing so I bother going over them.
Unless you are placing limit orders that are a fair amount away from the current price, I would just stick to “Day” orders, otherwise choose Good Till Cancelled unless you have a specific reason to want to cancel by a certain date.
Time to Buy?
Now that you know which order type and duration to choose, enter your order details and before you click buy, double check the following:
- You have the right ticker
- You have the right quantity
- If you want a limit order that you have the right price
- You have the right account selected
- You have enough funds in that account for the total purchase price
After you click Buy a confirmation will pop up allowing you to review the details of your order once more before sending it in.
Questrade will be kind enough to let you know if you don’t have enough money (or buying power for margin accounts), but they won’t do much to make sure you have the right ticker or order type so make sure you check these over yourself before hitting send.
Now that you placed your order you will likely be excited to see whether it goes through.
If you placed a market order during market hours it will likely process immediately and if you placed it when markets were closed it should go through at the start of the next trading day.
Similarly, if you placed a limit order during market hours, it won’t fill until the market price drops to your limit price (for purchases). The same is true if placed outside market hours, except as is with the market order you will have to wait for the next trading day.
Once your order is filled you will own the shares and you will have successfully made your first order in Questrade.
What do you think? Do you now feel ready to place your first order? Let me know in the comments below!