Write a short checklist to run through before you place any overseas order.
Buying on a US market from Singapore usually happens late in the day, on a phone, while the market keeps another continent's hours. In those conditions it's easy to let one detail slip: the session, the order type, a decimal point or the currency. A short checklist that you go through before each order catches that detail before it costs you money.
Pilots with thousands of hours of flying still work through a checklist before every flight. They haven't forgotten how to fly. The list is there to catch the single item that gets missed on a tired day. Yours needs to fit on one screen and take under a minute to run.
Hakim is an investor in Singapore who buys on US markets. His first order went in at 8pm, and he didn't know whether the regular session was open or whether extended hours was switched off. He later built a checklist from the mistakes described in lessons 6.1 to 6.3. It covers four checks in a fixed order: session, order, currency, spread.
First, ask whether the regular session is open right now. If it isn't, find out what will happen to your order. It will either wait for the open or go into a pre-market or after-hours session, which together are called extended hours. Spreads are wider in those sessions. Both questions depend on the time of year and on your broker's settings. Lesson 6.1, "US market hours from a Singapore timezone", explains how.
Next, check the order itself. Every order has four parts: type, limit price, quantity and duration. Most expensive mistakes happen here. The usual ones are choosing a market order when you meant a limit order, typing the limit price with the decimal in the wrong place, entering units when you meant a dollar amount (or the reverse), and forgetting a good-till-cancelled order. Lesson 6.2, "Market, limit and stop orders, and when each one hurts", dealt with that last one. Duration can be set to a day order or to good-till-cancelled. A good-till-cancelled order stays open until it fills or you cancel it, so it can sit there long after you've stopped thinking about it. Brokers usually limit how long a good-till-cancelled order can stay open, so check your broker's terms for its limit.
The fastest way to spot a misplaced decimal is to read the total order value in S$ before you submit. Say you meant a limit of 15.0 and typed 150. The S$ total would show an order costing ten times what you planned.
Third, confirm which currency you are paying in. Your broker may convert from Singapore dollars automatically, and if it does, you need to know the spread it charges. Otherwise it draws on a US dollar balance. Lesson 2.2, "Convert per trade, in bulk, or hold US dollars", sets out these routes. Pay closest attention when you hold balances in more than one currency, or when you buy a fund on a line priced in pounds rather than US dollars, the case in Lesson 5.3. An automatic conversion you didn't expect can cost more than the commission.
Last, look at the live bid and ask. The gap between them is the spread. If it's much wider than usual for that fund, something is off. The session may have only just opened, news may have come out, or the line may be thinly traded. If you're buying for the long term, waiting an hour or a day usually costs nothing. You can only tell what's unusual if you know what's normal, so for funds you buy often, write down the typical spread during the regular session a few times until you have a reference.
Hakim's finished checklist came to seven lines. He saved it as a note pinned next to his broker app:
Session: regular hours? If not, is extended hours off? Type: limit unless I have a reason. Price: within a sensible range of the last close. Quantity: units or amount, and does the total look right in S$? Duration: day order unless I mean otherwise. Currency: paying from USD balance, no auto-conversion? Spread: no wider than usual? If wider, wait.
He used it on his next three orders. For each one he wrote down the actual fill price next to the price he had expected. On the second order the spread line made him hold off until the next evening, and he got a better fill than he would have got that night.
Your checklist may look different. If you never use extended hours, drop that line. If you trade on two brokers with different settings, add a line for the one that catches you out. Keep it to eight lines or fewer, because a checklist too long to run every time stops being run. Write yours now, put it where you will see it before you trade, and use it on your next three orders. Each time, write the actual fill price beside the price you expected.
Write a checklist of eight lines or fewer, keep it next to your broker app, and use it for your next three orders.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).