AAII Guidance on Placing Stock Orders

The following is guidance from the American Association of Individual Investors about how buy and sell orders should be placed:

  • Market orders are not used.  Instead, if the quoted bid-ask spread is less than 2% (ask price minus bid price, divided by ask price), place a limit order at the ask price for a buy and at the bid price for a sell.  If the bid-ask spread is more than 2%, try to place a limit order between the bid and ask prices to keep transaction costs low.  If necessary, build a position gradually.  With zero commissions, it is often better to place partial orders than to try to establish a large position all at once.  Be patient.
  • The average daily dollar volume should be at least 10x the amount needed for your position.  This will ensure liquidity to get in and out of the position, even if you need to grow the position gradually and sell gradually.  This will result in a varying number of qualifying stocks for each investor.
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    Fixed Income ETF Selection

    Bucket 2 in the ETF Retirement Strategy is Fixed Income.  For this bucket, we attempted to pick a “best in class” ETF for each of the five (5) categories:


    Morningstar /Schwab Fund CategoryETF
    Long Government BondsEDV – Vanguard Extended Duration Treasury Index Fund ETF Shares
    Emerging Market BondsEMB – Shares JPMorgan USD Emerging Markets Bond ETF
    Municipal BondsMUB – iShares National Muni Bond ETF
    Long Term BondsVCLT – Vanguard Long Term Corporate Bond ETF
    World Bond – US HedgedBNDX – Vanguard Total International Bond Index Fund ETF Shares

    As with the Equity ETF’s, our desire is for the asset correlation to be less then .70.  read more

    Equity ETF Selection

    As I shared in a previous post, Mark and I have been on a journey of selecting a portfolio of ETF’s to include in the modified three bucket approach.

    After various iterations and experiments, we have settled on a “Magic 8” as the Equity portion of the portfolio (our buckets 3 and 4).  At the core of the eight (8) are a set of five (5) sector ETFs from George Dagnino with one substitution: read more

    Retirement Strategy Portfolio – ETF Selection Process – Overview and Introduction

    I have spent numerous hours researching ETF’s to include in our model portfolio.  As Mark has shared in other posts, we are using the “Three Bucket” approach recommended by Christina Benz with Morningstar.  In her articles, she includes investments for the three buckets for a moderate and aggressive portfolios.  If you are interested in the articles and unable to find them based upon Mark’s previous posts or doing Bing or Google searches, let me know and I will gladly share. read more

    Algorithm Comparison to Previous Versions

    Attached are comparison’s of the latest algorithm to two previous versions. In version 44, we attempted to replace and remove select ETF’s to see the impact. Overall Annual RoR increased from 8.34% to 8.41%.

    In version 45.2, Annual RoR increased to 9.49% by Mark introducing economic indicators into the model. I will let “the Dr.” go into more detail about the changes.

    For those who want to explore the data/results in more detail, I will post/share the Power BI report in the Portfolio Slicer topic area. The latest data from v45.2 is already loaded into the model. I will elaborate in more detail about the Power BI report in that post. read more