How To Execute a Stock or ETF Trade

This guide will help you execute a trade through your self-directed brokerage account. 

This walkthrough will show specific screens from the current Questrade platform, but the steps are relevant for any self-directed brokerage account that you may have.  For additional visual help, Questrade has a video showing how to execute a trade.

  1. Open and Fund your account.

We have prepared a guide on how to open a self-directed brokerage account.

  1. Log in to your account and select the account that you want to make the trade from (i.e. TFSA/RRSP/Non-Registered)

  1. Access the Trading Screen

To do so, you can either click on the ‘Trading’ icon from the drop-down menu from the top-left of the screen, or you can click the ‘Trade’ button in the top right.

Questrade Account Screen

 

  1. Determine the amount that you can invest on the trading screen

When you reach the trading screen, you can see your current balances in the account:

      • Cash
        • The amount you are currently holding in settled Cash in this account.
      • Market Value
        • The current market value of your investments in this account.
      • Buying Power
        • This is the maximum amount that you are able to invest on your next trade.
        • This amount will be reduced by any buy trade that you execute.
        • See below FAQs for an explanation around buying power vs. cash
  1. Lookup the security that you want to trade

In the top right corner of the screen, look up the security that you want to trade by entering either the symbol or the proper name, and select it from the drop-down that appears.  In the example above, we have looked up XIU, which is the symbol for the iShares TSX 60 ETF.  This security is traded on the Toronto Stock Exchange (TSX), which is why the symbol includes the trailing ‘.TO’ in the name shown in the drop-down menu.

Questrade ETF Lookup

  1. Enter your trade details

NOTE: ONLY PLACE TRADES DURING MARKET HOURS.

After hours trading is risky and is not recommended.  For reference, the TSX is open from 9:30 am – 4:30 pm EST.

On the order entry screen, you are given the current quote information for the security.

NOTE: Quote information is usually delayed by 15 minutes.

Questrade ETF Order Entry

      • Last Price
        • The price paid on the last trade for this security
      • Bid Price
        • The current price being offered on open buy orders
      • Ask Price
        • The current selling price being requested on open sell orders
      • Bid Size
        • The # of units of the current bid order
      • Ask Size
        • The # of units being offered at the current ask price

When buying an ETF, we recommend that you offer as close to the ask price as possible.  When selling, offer as close to the bid price as possible.  If you are trading index ETFs, the spread between the bid and ask will generally be nominal.

In this example, we placed a limit price of $22.37 per unit, which was $0.01 higher than the ask price.  Across the 100 units that were being bought, this was $1 total more than the current ask price for this ETF.  This is a nominal amount to ensure that you should be able to have your trade filled.  If you were to offer only at the bid price, your trade may not be able to be filled by the broker.

Once you determine the price to be offered, you will enter the parameters of your trade and Click “Buy” or Sell”.

      • Quantity
        • The number of units/shares to purchase or sell
      • Order Type
        • Only ever execute Limit trades
        • This dictates a maximum price for a buy order and a minimum price for a sell order.
      • Price
        • The price that you are willing to pay for the security (close to Ask on Buy, close to Bid on Sell).
        • Ensure the bid and ask price are close together.
      • Duration
        • How long you want the trade to be open for.
        • As prices are dynamic, there may not be a buyer or seller at the price that you enter at the exact moment that you make your trade.
        • As such, the trade will stay open for the duration you indicate
        • Only execute trades that are open for the Day duration
  1. Confirm that the details of the trade are accurate

A splash screen will appear for you to confirm the details of your trade.  You will see the total trade cost and your updated buying power.  If the details are accurate, click ‘Send Order’.

Questrade ETF Buy Confirmation

  1. Check the status of your order

You will be shown a pop-up with the order details.

In the screen below, you see the status as ‘Executed’.  This means that the trade has been filled.  It was filled at $22.36 per unit (the Fill Price), which was less than the limit price we submitted at $22.37.

Questrade ETF Order Details

If the status is showing as ‘OPEN’, then your trade has not been filled.

If the unit price moves higher than your limit price on a buy order, then you may have to raise your limit price by modifying your order.  The opposite is true on a sale, where if the price moves lower you may have to lower your asking price to have your trade fulfilled

After you close the Order Details pop-up, you will be returned to the Trading screen.  Go to the Orders screen by clicking on ‘ORDERS’ in the upper left menu on the Trading screen.

Questrade Order Menu

 

On the Orders screen, you will see the order that you just placed.

Questrade Orders Screen

Select the trade and adjust the limit price if the bid/ask price moves after you have placed your order.

Once the trade has been filled – you are done!

Congratulations!  Understanding how to make a trade puts you in a position to take control of your finances and manage your own investments.

Trading FAQ

Trading (3)

After you place a trade, the transaction is in what is known as the settlement period.  What this means is that there is a period where the brokerage works to move the securities and cash between the accounts of those parties involved in the trade (i.e. cash out, stock in or vice versa).

The day that you execute the trade, to either buy or sell, is the trade date.  The settlement date is typically trade date + 3 days (i.e. T+3).  Your buying power is measured on a trade date basis, where your cash balance is on a settlement basis.  If you execute no other trades, your cash and buying power will be equal after the trade has settled.

This is an instruction to the brokerage.  When you place a market order, the broker will make the trade at any price that the market will bear.  When you place a limit order, they can not go above (on a buy order) or below (on a sell order) the price that you provide.

Your hope is to place orders that are fulfilled very quickly.  A lot can change from day-to-day in the market, and leaving trades open longer than a day is not recommended.  Other duration options are:

  • GTD – Good-Till-Date
    • Expiry date specified by the user, but cannot be open longer than 90 days
  • GTC – Good-Till-Cancelled
    • Expires only if cancelled by the user, or 90 days, whichever is sooner.
  • GTEM – Good-Till-Extended Market
    • This means that the trade will be active in extended trading (until 5:30 pm for Canada exchanges), which is not recommended due to added risk.
  • FOK – Fill or Kill
    • This is a trade that is executed immediately and completely or not at all. This trade type is useful for active traders who trade large volumes of securities.
  • IOC – Immediate or Cancel
    • Similar to FOK, the trade must be executed immediately, but the IOC trade will allow for a partial # of the securities of the order to be fulfilled.  FOK is all or nothing.

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