Whilst it is highly unlikely, “anything can happen” - like Lehmann Bros!
The hundred bits of paper are virtually all electronic files if you opt to receive electronically (if you want them) and to set up with each stock transfer company (like Computershare) master instructions for all current and future holdings. Even monthly holding statements are now electronic.
Excuse my naivity as a relative beginner, but what is the reason for setting MOC orders? What are the benefits and/or risks of this approach vs setting a normal Limit order?
Hi Rob,
Here are the 3 main benefits:
-
Trading systems that use daily data are researched using the EOD (End Of Day) Close price for their signals and ‘benchmark’ entry / exit price. The closer the trader can execute trades with the price that is used during research, the closer the research results can be replicated in live trading.
-
A MOC order can be placed outside of market trading hours (subject to Cash Buffers - see separate Forum discussion), meaning there is no need to HAVE to access and place trades during business hours (or sleeping hours for Australians trading the US market).
-
Limit orders require finessing to get filled; MOC orders don’t. Making them relatively very convenient and efficient. They are a massive time saver. Add up the minutes over a year spent finessing Limit orders and potentially many hours of one’s life are recovered.
-
Psychologically, MOC orders lend themselves to traders truly becoming mechanical, that is, objective and consistent. They shut down most of the window during which traders can be overcome with “noise” in the heat of the moment and not execute according to their Trading Plan.
That should do it. Any benefits others find from trading with MOC orders?
Great explanation Gary.
Rob,
Forgot to list another very important benefit…
Using the BC Simulator, we have researched / back-tested the following 4 combinations for SPA3 Investor U.S. & ASX stocks portfolios over many years:
- MoO & MoO, for opening and closing a trade
- MoO & MoC
- MoC & MoO
- MoC & MoC
where MOO - Market on Open order.
Combination 4 of MoC & MoC was significantly better than the other 3 combos for trading U.S. stocks but only slightly better for trading ASX stocks.
Hi Gary, i did that exact set of simulations for ASX investor stocks and a couple of ETF core strategies over 20, 15 and 10 years and found the same outcome.
Cheers Rob
Thanks for the feedback. Certainly helps with my understanding and also great to know the level of testing that was done before the SPA 3 Income was released.
Rob