ETF Trading

etf trading

What are ETFs

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. ETFs are traded on an exchange, and their value shifts during the day, due to buying and selling actions done by the traders.

Why Trade ETFs with AvaTrade

  • Trade with confidence – AvaTrade is an internationally regulated broker.
  • Large variety of instruments – Choose from a variety of instruments to trade with CFDs.
  • Competitive Spreads – Starting at just 0.8 pips.
  • Leverage – Get leverage of up to 20:1 on your trades.
  • Short trading available – Benefit also when the market goes down.
  • Master your trading skills – High quality educational materials & daily market analysis.
  • Best in class costumer service – 24/5 multi-lingual live support.

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, 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 more than 25 popular ETFs to trade as CFDs, giving traders the ability to trade long or short with leverage of up to 20:1.

Trading Platforms

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 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 account before trading is a recommended option, so you can practice trading on those platforms before doing so in the real market.

Leverage Trading

One of the most common tools used by traders is Leverage, 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 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 tutorialsglossary 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!