In a previous article, I discussed why I believe Questrade is the best online brokerage for Canadian DIY investors.
Today, I want to walk you through step by step how to buy ETFs using Questrade.
Step 1: Log in to Questrade
Go to Questrade's website, click "LOG IN" and enter your user name and password.
Step 2: Click The Green Trade Button
Once you log in to your Questrade account, you will be taken to that is called your "summary of accounts". This shows you the total balance of your various accounts with Questrade.
In the top right-hand corner, you will see a green button that says "TRADE". Click that button.
Step 3: Select Which Account you want to buy the ETF in
After you click the "TRADE" button you will be brought to a new page where you can make trades. If you have multiple accounts, you will want to ensure you select the right account.
In the screenshot above, I have a TFSA, RRSP, and RESP. If I want to buy an ETF in my TFSA I need to make sure I select my TFSA from the dropdown menu.
Then on the right-hand side, you will see a rectangular box titled "Order entry". This is where you will input the necessary information to make the ETF purchase.
Step 4: Fill out order entry
Let's review the basic information you need to input in the Order entry to buy an ETF on Questrade.
At the top of the above image, where the large red arrow is pointing to the left is where you enter the name of the ETF you wish to purchase. In this example, I was buying "VCN.TO" (not an endorsement of this particular fund) which is an ETF that tracks the entire Canadian stock market.
Once I have selected VCN.TO, you will be presented with some terminology that shows you what price investors are currently willing to buy and sell the ETF you selected. Let's review each term and what they mean.
Last: this shows the current market price the ETF is listed for. In this example VCN.TO was listed at $25.87
Bid: this shows the current price investors who want to buy this ETF are willing to pay for it. In this example investors interested in buying VCN.TO were willing to pay $25.83 per unit.
Ask: this shows the current price investors who want to sell this ETF are willing to sell it for. In this example investors interested in selling VCN.TO were willing to sell for $25.88 per unit.
This information will be useful when you fill out the details of your order which are below the bid-ask prices. Let's review the information you will input to finalize the purchase.
Quantity: This is where you enter the number of units you wish to purchase. This will be determined by how much money you have and the current bid price of the ETF you wish to purchase.
Order type: There are a number of different ways you can structure your order. The default in Questrade is a "limit order". A limit order specifies the highest price you are willing to pay for the ETF you wish to purchase. For a full list of order options check out these guidelines from Questrade.
Limit price: If you selected "limit order" than this is where you enter the maximum price you are willing to buy for the ETF. Personally, I enter the bid price as the limit price. Why would I be willing to pay more than other investors for this ETF? However, do your research and enter whatever limit price you are comfortable with.
Duration: The order duration allows you to control how long you want your order to remain active. The default choice is "Day", which means the order will expire if not executed by the end of the trading day. For a full list of order, duration options check out these guidelines from Questrade
Account: If you have multiple accounts it's important to make sure you are buying the ETF in the right account. If I wanted to buy this ETF in my TFSA, I would select TFSA under the account option.
Putting it all together
Once you hit the green "BUY" button a confirmation window will pop up. This allows you one last opportunity to verify the information on the trade before executing. It's important to take the time to review what you have entered, once the trade is executed there are no "do-overs".
If you have sufficient funds in your account to make the purchase the order will be accepted. If/when the order is executed then you have successfully bought an ETF on Questrade.
It can seem complicated but in reality, it has never been easier to be a DIY investor. You simply need to understand some basic terminology and get comfortable with the process.
If you are simply not comfortable entering this type of information on your own, you might consider using a Robo-advisor service or a financial advisor to take over this process for you.
Need a hand taking control of your finances? Join the 30-day money challenge.
Don't forget to join our private Facebook group of Millionaires in the Making.
This article is for informational and entertainment purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any major financial decisions.