ETFs, or Exchange Traded Funds, are a type of investment fund that tracks underlying assets like indices, bonds, commodities and divides ownership of those assets into shares. ETFs are traded on an exchange, and their value shifts during the day, due to buying and selling actions done by the traders. As ETFs trade just the same way stocks do, they do not have their own net asset value (NAV), and they are calculated once at the close of every market day.
Why Trade ETF with AvaTrade?
· Trade with confidence- AvaStocks is an internationally regulated broker
· Large variety of trading instruments- CFDs for a wide range of instruments are available for trading
· Competitive Spreads – Spread is as low as 0.8
· Flexible leverage- up to 20:1
· Could short-also profitable when the market is down
· Master your trading skills – Expand your horizons by entering our educational materials & daily updates.
· Best in class customer service – 24/5 multilingual live support with a dedicated account manager.
What is an ETF
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, 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 goes down, as part of the energy basket, a stock of the same basket might even it out.
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 popular ETFs to trade as CFDs, giving traders the ability to trade long or short with leverage of up to 20:1.
When you wish to start trading, you can choose from a vast selection of trading platforms. Some of them are built for manual trading, whilst others are for traders who prefer their trades to be done automatically. We also support the use of expert advisors for MT4. Thanks to that variety each of our clients can find the platform that is most convenient for him to trade on. Opening a demo account before trading is a recommended option, so you can practice trading on those platforms before doing so in the real market. Platforms available at AvaTrade – and fully compatible with Android or iPhone:
One of the most common tools used by traders is Leverage (a.k.a. Margin trading), whose purpose is to enable the trader to open positions larger than his account's equity. AvaTrade offers you up to 20:1 leverage when trading ETFs, which is the equivalent ot using only a fraction 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'll give you an example; if an investor wants to trade some kind of ETF set, worth $2,500, that's quite a lot. But using leverage would require only 5 % of that position. In other words, you only need to use the $125 in your account to complete the transaction.
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 at AvaTrade
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 learning how to trade. Our portfolio of educational tools is vast. In addition, an education portal developed and maintained by AvaTrade called Sharp Trader offers any level of trader the right tools to get started on a potential trading career.
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!