ETFs, otherwise known as "Exchange Traded Funds", are a fast-growing segment of the Finance and Investment Market which are moving towards supplanting Mutual Funds as preferred means of fund investing.
You probably know most of the ways available to trade the markets... Stocks, Forex, Options, Futures & Commodities, ... plenty of trading choices to consider.
But for over a decade now - since the early 90's, there's been a group of funds that are now growing rapidly as more investors and traders become aware of their profit potential - that is, ETFs.
In 1996 there were about $16 billion in ETFs... then just over a decade later that number has sky-rocketed to in excess of $600 billion!
An ETF is a fund comprised of a group of stocks, bonds, or other investment vehicles similar to a mutual fund. However, unlike a mutual fund, ETFs trade like stocks allowing a trader to buy and sell during normal exchange trading hours. Hence you can have immediate access to your funds upon selling an ETF position during normal market hours anytime you want.
Whilst ETFs can be generally more cost and tax efficient than mutual funds, a commission cost applies in the same way as it would have when trading stocks. There are no minimum buy requirements or holding period requirements common to many mutual funds. Likewise, you can buy as little as 1 share of an ETF as you would buy 1 share of a stock.
In simple terms, this means you can get the diversification that a fund has to offer and the ability to trade in and out of the fund. This is a big deal, because you can virtually eliminate stock specific risk by trading a basket of stocks within the fund so that if one stock in the fund suddenly drops in price, the negative impact on a position you may have in the fund would be far less than if you had owned a position in the shares of that particular stock.
There are many different types of funds available. In the United States alone there are currently now over 600 funds, with more being added on a daily basis. ETFs include stock sector, country, currency, commodity, bond or other investment objective related funds.
Further, there are funds that have only short positions and are sometimes referred to as "short" funds, or "short ETFs", which will increase in price as the short positions they hold go down in price.
Some funds are leveraged funds, meaning that when the stocks in their funds go up by say 5%, the fund could go up by 10% and short funds whose stocks go down in price by say 5%, could go down 10%.
ETFs are also a growing investment vehicle in international stock markets as well. A prospectus on each ETF is available and information on the individual holdings of an ETF can be found on Yahoo Finance and other financial related websites.
However, not all ETFs are suitable for trading as many are thinly traded or too volatile to be considered good swing trading vehicles. ETFs in the U.S. are created and maintained by sponsor companies subject to the approval and regulation of the Securities and Exchange Commission.
Success in any chosen field can only be gained by knowledge and practice. Knowledge is best gained from recognised experts in their field.
Nadine Huegel
http://www.squidoo.com/MoneyMarketMastery
You probably know most of the ways available to trade the markets... Stocks, Forex, Options, Futures & Commodities, ... plenty of trading choices to consider.
But for over a decade now - since the early 90's, there's been a group of funds that are now growing rapidly as more investors and traders become aware of their profit potential - that is, ETFs.
In 1996 there were about $16 billion in ETFs... then just over a decade later that number has sky-rocketed to in excess of $600 billion!
An ETF is a fund comprised of a group of stocks, bonds, or other investment vehicles similar to a mutual fund. However, unlike a mutual fund, ETFs trade like stocks allowing a trader to buy and sell during normal exchange trading hours. Hence you can have immediate access to your funds upon selling an ETF position during normal market hours anytime you want.
Whilst ETFs can be generally more cost and tax efficient than mutual funds, a commission cost applies in the same way as it would have when trading stocks. There are no minimum buy requirements or holding period requirements common to many mutual funds. Likewise, you can buy as little as 1 share of an ETF as you would buy 1 share of a stock.
In simple terms, this means you can get the diversification that a fund has to offer and the ability to trade in and out of the fund. This is a big deal, because you can virtually eliminate stock specific risk by trading a basket of stocks within the fund so that if one stock in the fund suddenly drops in price, the negative impact on a position you may have in the fund would be far less than if you had owned a position in the shares of that particular stock.
There are many different types of funds available. In the United States alone there are currently now over 600 funds, with more being added on a daily basis. ETFs include stock sector, country, currency, commodity, bond or other investment objective related funds.
Further, there are funds that have only short positions and are sometimes referred to as "short" funds, or "short ETFs", which will increase in price as the short positions they hold go down in price.
Some funds are leveraged funds, meaning that when the stocks in their funds go up by say 5%, the fund could go up by 10% and short funds whose stocks go down in price by say 5%, could go down 10%.
ETFs are also a growing investment vehicle in international stock markets as well. A prospectus on each ETF is available and information on the individual holdings of an ETF can be found on Yahoo Finance and other financial related websites.
However, not all ETFs are suitable for trading as many are thinly traded or too volatile to be considered good swing trading vehicles. ETFs in the U.S. are created and maintained by sponsor companies subject to the approval and regulation of the Securities and Exchange Commission.
Success in any chosen field can only be gained by knowledge and practice. Knowledge is best gained from recognised experts in their field.
Nadine Huegel
http://www.squidoo.com/MoneyMarketMastery
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