--- title: The Low-Risk Way to Buy ETFs description: ETFs aren't like traditional index funds or mutual funds, and you could get burned if you don't buy them the right way. authors: - name: Ethan Wolff-Mann url: https://money.com/author/ethan-wolff-mann/ at_money_since: 2015 articles: 160 covers: - Investing - Banking - Business - Career Advice - Credit - Credit Cards - Economy and Politics - Education - Housing - Identity Theft - Insurance - Lifestyle - Personal Finance - Professional Services - Shopping - Taxes - Technology social: - https://x.com/ewolffmann former_staff: true published: '2016-05-23T16:10:20.000Z' modified: '2024-04-16T10:21:01.000Z' section: Investing tags: - ETFs - funds - Investing word_count: 306 canonical: https://money.com/etfs-safe-way-buy-limit-order/ type: Article source: structured-blocks --- > **Disclosure:** We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![caliper with coins in it](https://img.money.com/2016/03/160322_inv_etflimit.jpg) If you're looking to pepper your portfolio with exchange-traded funds (ETFs)—including the many [on the](https://money.com/money-50-best-mutual-funds-etfs-2016/) *[Money 50](https://money.com/money-50-best-mutual-funds-etfs-2016/)*—it's prudent to do so in a safe way. While ETFs mimic regular index funds in many ways, they can behave in bizarre ways when the [market is stressed](http://www.wsj.com/articles/stock-market-tumult-exposes-flaws-in-modern-markets-1440547138), fluctuating in value quickly and unexpectedly. To avoid this problem, firms like Vanguard [recommend](https://personal.vanguard.com/us/insights/article/market-stoploss-limit-orders-092015) that you steer clear of market orders and instead use limit orders to execute ETF trades. A market order, the most basic type of buy order, quotes you a price that you can accept. However, fluctuations can occur in the very short time between the quote and the final price. Usually, the changes are very small, but for ETFs, there is the potential to get burned due to their volatility. "Limit orders are a best practice for ETF investors," says Vanguard spokesperson Katie Hirt. The limit order, unlike the market order, will only execute the trade if the price is under the amount you specify. So if the ETF is trading around $45 and you want to buy one share for no more than $46, you could place a limit order for that amount. When you place a limit order for more than the market price, it's called a "marketable limit order," and it's a good option for controlling both the price and execution. In that situation, you're not agreeing to pay $46 no matter what, you're just agreeing to pay *up to* $46, if that's where the market price is. But you won't pay more: The worst-case scenario here would be a canceled trade. On the other hand, if you request a market order at $45, and the price jumps to $55 before the order is processed, you'd be out of luck and on the hook for $55—for a share you thought would only cost $45. ```json { "@context": "https://schema.org", "@graph": [ { "@type": "BreadcrumbList", "@id": "https://money.com/etfs-safe-way-buy-limit-order/#breadcrumb", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://money.com" }, { "@type": "ListItem", "position": 2, "name": "Investing", "item": "https://money.com/investing/" }, { "@type": "ListItem", "position": 3, "name": "ETFs", "item": "https://money.com/etfs/" }, { "@type": "ListItem", "position": 4, "name": "The Low-Risk Way to Buy ETFs" } ] }, { "@type": "WebSite", "@id": "https://money.com/#website", "url": "https://money.com", "name": "Money", "publisher": { "@id": "https://money.com/#organization" } }, { "@type": "WebPage", "@id": "https://money.com/etfs-safe-way-buy-limit-order/#webpage", "url": "https://money.com/etfs-safe-way-buy-limit-order/", "name": "The Low-Risk Way to Buy ETFs", "isPartOf": { "@id": "https://money.com/#website" }, "datePublished": "2016-05-23T16:10:20.000Z", "mainEntity": { "@id": "https://money.com/etfs-safe-way-buy-limit-order/" }, "inLanguage": "en-US", "breadcrumb": { "@id": "https://money.com/etfs-safe-way-buy-limit-order/#breadcrumb" }, "dateModified": "2024-04-16T10:21:01.000Z" }, { "@type": "Article", "headline": "The Low-Risk Way to Buy ETFs", "articleSection": "Investing", "image": [ { "@type": "ImageObject", "url": "https://img.money.com/2016/03/160322_inv_etflimit.jpg", "width": 2100, "height": 1400, "caption": "160322_INV_ETFLimit" } ], "author": [ { "@type": "Person", "name": "Ethan Wolff-Mann", "url": "https://money.com/author/ethan-wolff-mann/", "@id": "https://money.com/author/ethan-wolff-mann/#author", "sameAs": [ "https://x.com/ewolffmann" ] } ], "publisher": "https://money.com/#organization", "datePublished": "2016-05-23T16:10:20.000Z", "description": "ETFs aren't like traditional index funds or mutual funds, and you could get burned if you don't buy them the right way.", "abstract": "ETFs aren't like traditional index funds or mutual funds, and you could get burned if you don't buy them the right way.", "@id": "https://money.com/etfs-safe-way-buy-limit-order/", "inLanguage": "en-US", "dateModified": "2024-04-16T10:21:01.000Z", "wordCount": 306, "keywords": [ "ETFs", "funds", "Investing" ], "about": [ { "@type": "Thing", "name": "Investment", "sameAs": [ "https://en.wikipedia.org/wiki/Investment" ] }, { "@type": "Thing", "name": "Exchange-traded fund", "sameAs": [ "https://en.wikipedia.org/wiki/Exchange-traded_fund" ] } ] } ] } ```