Options Trading System

About ETF

ETF (Exchange Traded Fund) is a security that provides ownership over part of a basket of individual stock. ETFs are index funds that are traded just like stocks. You may find ETFs on all major stock indexes, including Dow Jones Industrial Average, Standard & Poor's 500 Index, NASDAQ 100 Index, Nasdaq Composite, etc.

There are ETFs for different sectors of the economy: industrial sector, technology, telecommunication, health care, real estate investment trusts, international stocks, bonds, and even gold. That allows with a single transition to focus an investment goal on a specific industry.

Exchange traded funds differ from traditional mutual funds. The main difference is that ETFs are funds that are traded like stocks: they could be sold during the trading hour, thy could be traded on margin, they could be sold short, etc. The biggest advantage for a retail trader is that the most difficult complex fundamental analysis is done by sponsors of ETFs. The ETFs sponsors track all companies from the index basked, they analyze them, they remove weak companies from the listing and they include stronger companies.

The great flexibility of the Exchange Traded Funds made them the most popular trading vehicle. Such stocks as QQQ (ETF on the Nasdaq 100 index), SPY (ETF on the S&P 500 index) and DIA (ETF on the DJI index) are not only the most popular and most actively traded stocks in US but all over the globe.