What Is ETF Trading?

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Making a living from online trading is a dream for millions of people, and with a decent laptop, a fast internet connection and the right approach, it’s rapidly becoming a reality.

Of course, trading is by no means a ‘get-rich-quick’ scheme – it takes patience, experience and discipline to make consistent profits over the long-term. The first thing to do is to determine what kind of trading style you want to adopt, which depends on your starting balance, the amount of time you can devote, your tolerance for risk and various other factors. However, there’s a relatively new way to invest that’s proving popular with a wide range of traders: ETF products.

ETF stands for Exchanged Traded Fund. Each one is an index-based investment fund that replicates the performance of an index (such as the French CAC40, the German DAX30 or the American Dow Jones), a sector of activity (such as technology, finance, utilities etc.), or a commodity (such as Silver, Oil or Gas).

It’s a relatively simple product that can be bought and sold during trading hours under the same conditions as other financial assets, such as equities or currency pairs. They’re listed on stock exchanges, so there’s no liquidity problem, and you can benefit from bearish or bullish markets over the medium to long-term, taking advantage of moneymaking opportunities whether the market moves upwards or downwards.

Since you’re investing in a product that includes a wide range of assets, you are, in effect, applying a healthy amount of diversification to your portfolio, rather than putting all of your eggs into one basket.

Brokers or specialized platforms such as UFX give you easy access to ETFs, some of which are available with generous leverage of up to 400:1. Always bear in mind that leverage should be used wisely, with a proper management plan in place, as the larger the leverage is, the greater your risk will be. However, with a sound strategy based on both fundamental and technical analysis, ETFs can be powerful weapons in any trader’s arsenal, creating opportunities for significant returns from the overall momentum of major assets and markets.

 

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