ETFs, or Exchange Traded Funds, are a type of investment fund that tracks indices, bonds, commodities and other instruments, combined in a basket of assets such as bitcoin trading platform, stocks, commodities and more. ETFs are traded on an exchange, and their value shifts during the day, due to buying and selling actions done by the UK traders in this 2020.
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What is ETF Trading?
An ETF is a collection of assets put together, to permit traders to trade in a few markets simultaneously. The baskets are usually combined together with a common characteristic such as energy instruments, agriculture instruments and others. If you wish to trade a stock, commodity and bonds all together you can simply trade in the ETF market.
Some ETFs track the performance of a specific nation’s equity market. Examples are the MSCI Brazil Index Fund, MSCI South Korea Index Fund and others. ETFs also make it possible to invest in certain industry sectors. Examples offered by AvaTrade are the Dow-Jones U.S. Real Estate Index Fund and the Energy Select Sector SPDR. It is important to know that all ETFs are traded as CFDs.
ETFs are traded as a basket of assets – stocks trading, commodities and more, put together per sector. If you speculate that the energy market, for instance, will go up, you can invest in a few trades simultaneously. A prominent advantage of ETFs is that often they balance each other out; if one instrument’s value goes down, another instrument’s value can go up and even it out. If the price of crude oil trading goes down, as part of the energy basket, a stock of the same basket might even it out.
Why Trade ETFs with AvaTrade?
- Trade with confidence – AvaTrade is an internationally regulated CFD and forex broker.
- Large variety of instruments – Choose from a variety of instruments to trade with CFDs.
- Competitive Spreads – The best in the market
- Leverage – Get leverage of up to on your trades.
- Short trading available – Benefit also when the market goes down.
- Master your online trading skills – High quality trading educational materials & daily market analysis.
- Best in class costumer service – Multi-lingual live support.
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Enjoy competitive spreads & high leverage.
How to Trade ETFs with AvaTrade?
Since ETFs play on the range of markets, you’ll need a broker that offers trading in all those markets with good conditions. ETFs require knowing the markets well enough to determine when to enter it and when to exit, and to know how each instrument will affect the other. AvaTrade is aware of the ETFs’ special nature and helps you stay on top of the market, to use the price changes to your favour. AvaTrade offers a range of more than 25 popular ETFs to trade as CFDs, giving traders the ability to trade long or short with leverage of up to .
When you wish to start trading, you can choose from a vast selection of trading platforms. Two of them are built for manual trading, whilst others like Mt4 are for traders who prefer their trades to be done automatically. Thanks to that variety each of our clients can find the platform that is most convenient for him to trade on. Opening a demo trading account before trading is a recommended option, so you can practice trading on those auto trading platforms before doing so in the real market.
One of the most common tools used by traders is Leverage trading, whose purpose is to enable the trader to open positions larger than his account’s equity. AvaTrade offers you up to leverage when trading ETFs, which is the equivalent of 5% of a position’s value required in order to open it. Leverage is a common tool used worldwide, and we offer the best conditions for it
We will give an example; if you want to trade a certain ETF basket that is valued at $2,500, a rather large amount of money. Using leverage, however, will require using only 5% of the position, which means you’ll only have to use $125 of your account.
Using Leverage makes trading easier and can increase a trader’s profits. However, one should always bear in mind that losses can be magnified on the same scale.
How Much Will it Cost to Trade ETFs?
You can read more about the benefits for our clients on the Trading Conditions & Charges page.
Educational tools available
When trading any instrument, especially one as complex as ETFs, you need to keep yourself updated and informed at all time. Naturally AvaTrade caters clients with education and product knowledge, and we recommend using our video tutorials and other educational tools. Let us guide you all the way, and get exposed to learning materials and market reviews that are essential for trading.
Start Trading ETFs with AvaTrade
If you enjoy working on several markets simultaneously, challenging yourself into making rational investments and trading on one of the most prestigious markets in the world – trading Exchange Traded Funds is exactly for you!
Enjoy the benefits of an internationally regulated broker!
Main ETF FAQ
- How does ETF trading work?
Trading ETFs has become popular because it combines the ease of stock trading with the diversification found in mutual funds. They can be bought and sold in the same way as any stock, but because they mirror the composition of some index or other sector they are a useful way to capitalize on larger macro trends in the market. ETFs make it possible to speculate on the broader markets, such as the S&P 500. They can also be used in commodity trading, where using futures can be costly and require large upfront capital.
- Are ETFs good for beginners?
Trading ETFs is a perfect way for a beginner to become familiar with the markets and to begin their trading career. This is because ETFs feature low costs, excellent liquidity, diversification, a broad choice of investments, and a low initial capital requirement. Beginners can use some of the most popular trading strategies to get started, and can focus on any industry, asset type, or market sector they like. There are even inverse ETFs that can be used to mimic shorting a stock, but with fewer risks.
- Can you make money trading ETFs?
Because ETFs are bought and sold similarly to stocks or other asset classes they can be used to make profits. However they do not guarantee profits. A loss can be incurred from an ETF trade just as it can from any other type of trading. So it is important to understand the ETF you’re buying before investing. Some ETFs use short selling or leverage to try and generate better returns. This also increases the risks involved in trading these ETFs.