Ever thought of trading ETFs? ETFs stand for Exchange Traded Funds. ETFs represent an ownership stake in a basket of underlying assets or securities. This basket can represent a specific index like the S&P 500 or the Nasdaq 100. It could be a segment of market like the small cap, large growth stocks. It can also be a sector like semiconductor, energy, travel. There are even ETFs on foreign currencies like Euro, Yen, and USD.
It can also comprise of bonds, gold, silver or other commodities. The value of the ETF is determined by the underlying securities. So you may be thinking this sound like a mutual fund.
The unit price of ETF changes instantaneously unlike the Mutual Funds that are priced at the end of the trading day. ETFs can be brought and sold throughout the trading day like ordinary stocks. ETFs are different from the Mutual Funds in a number of ways.
There is no minimum for ETF purchases. ETFs can be traded using the market, limit and stop loss orders. ETFs can be shorted, traded with a margin account and many trade options. So ETFs offer the diversification advantages of mutual funds and the flexibility of stocks.
Suppose you have a bullish opinion on the oil sector. After spending hours you will select the one company that you think is the strongest. You will have to analyze dozens of companies in the oil sector. One of the main advantages of ETFs is that they offer diversification.
ETFs provide you the benefit of diversification in the same way that mutual funds do to the small retail investors. Instead of investing in a few stocks you can now invest in a particular sector just like investing in a mutual fund. You could choose the Oil Sector ETF that would give you the advantage of mimicking some oil sector index.
The key advantage that ETFs hold over mutual funds is that they can be sold or bought at anytime of the day. ETF prices keep on changing in relation to the underlying assets. However, mutual funds are priced only once at the end of each trading day.
A mutual fund charges management fees. It can also charge upfront, backend or other sales loads. Expense ratios for ETFs on average are not more than 0.4%. Some have even expense rations as low as 0.07%. This is the main advantage of ETFs over mutual funds. It is the fees charged by each. ETF expenses are low because they are passively managed and generally follow an established index.
Currency trading has become extremely popular among the big players like the institutional investors, big companies and hedge funds. Foreign currency trading is not just for gamblers or commodity traders. It is now available to retail investors like you and me also.
Foreign currency has become a respected asset classification and is so hot that now you can trade Exchange Traded Funds (ETFs) on currencies. As with any other product there are advantages and disadvantages of trading ETFs. - 23210
It can also comprise of bonds, gold, silver or other commodities. The value of the ETF is determined by the underlying securities. So you may be thinking this sound like a mutual fund.
The unit price of ETF changes instantaneously unlike the Mutual Funds that are priced at the end of the trading day. ETFs can be brought and sold throughout the trading day like ordinary stocks. ETFs are different from the Mutual Funds in a number of ways.
There is no minimum for ETF purchases. ETFs can be traded using the market, limit and stop loss orders. ETFs can be shorted, traded with a margin account and many trade options. So ETFs offer the diversification advantages of mutual funds and the flexibility of stocks.
Suppose you have a bullish opinion on the oil sector. After spending hours you will select the one company that you think is the strongest. You will have to analyze dozens of companies in the oil sector. One of the main advantages of ETFs is that they offer diversification.
ETFs provide you the benefit of diversification in the same way that mutual funds do to the small retail investors. Instead of investing in a few stocks you can now invest in a particular sector just like investing in a mutual fund. You could choose the Oil Sector ETF that would give you the advantage of mimicking some oil sector index.
The key advantage that ETFs hold over mutual funds is that they can be sold or bought at anytime of the day. ETF prices keep on changing in relation to the underlying assets. However, mutual funds are priced only once at the end of each trading day.
A mutual fund charges management fees. It can also charge upfront, backend or other sales loads. Expense ratios for ETFs on average are not more than 0.4%. Some have even expense rations as low as 0.07%. This is the main advantage of ETFs over mutual funds. It is the fees charged by each. ETF expenses are low because they are passively managed and generally follow an established index.
Currency trading has become extremely popular among the big players like the institutional investors, big companies and hedge funds. Foreign currency trading is not just for gamblers or commodity traders. It is now available to retail investors like you and me also.
Foreign currency has become a respected asset classification and is so hot that now you can trade Exchange Traded Funds (ETFs) on currencies. As with any other product there are advantages and disadvantages of trading ETFs. - 23210
About the Author:
Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in day trading stocks and forex. Understand The Forex Market. Learn Forex Trading!
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