Monday, 5 March 2012

Use The Various Different ETFs To Help You Generate Profits

By Jake Wilson


If you have some money to invest, then you obviously have a lot of options. You can invest in property, or you can invest your money into the stock market if you prefer. In this article I want to focus on stock market investing, and ETF investing in particular.

I wouldn't blame you if you do not know what ETFs are because not a lot of people do. It is basically an abbreviation of exchange traded funds, and the reason why I like them so much is because they provide you with lots of options as an investor. To be fair they also give you lots of options as a trader as well.

The trouble with investing in ordinary stocks is that you can only trade in one direction. In other words you are always looking for undervalued stocks whose stock price is likely to rise in the future. You are also restricted to investing in individual companies rather than a collection of companies.

This isn't actually true with exchange traded funds because you have so many options here. When you buy an ETF, you can essentially gain exposure to a large group of companies rather than an individual company. Subsequently it is possible to invest in certain sectors that you think are likely to grow in the near future with a single ETF investment.

You also have the option of buying exchange traded funds that track all of the major stock market indices such as the FTSE 100 and the NASDAQ. If the index moves up or down, you should find that the corresponding ETF moves in exactly the same fashion. It may also be an idea to invest in a group of foreign companies or an overseas sector because this is perfectly possible with exchange traded funds.

The one thing I really like about these funds is that you can generate some decent short term profits from them as well. For example if you fancy taking a short position on a certain sector of the market, you could choose to invest in a short ETF and make money from any drop in price.

For more trading tips, you might like to check out this Portfolio Prophet review to learn about a course that will reveal a few highly profitable trading strategies.

If you are investing in these instruments for the first time, then I suggest you invest in a good course to give you all the information you need. One of the best traders you can listen to is Bill Poulos because he is very knowledgeable and has a lot of experience. That's why I particularly like the Portfolio Prophet software, which he created, because it will help you get started.

The point is that ETFs are very easy to understand, and the flexibility that they offer make them ideal instruments for many traders and investors. They can be bought and sold just like normal stocks, and you can easily use them to take short positions and to gain exposure to groups of stocks and sectors of the market.

In fact some people would say that ETFs have many more benefits than conventional stocks because they are such flexible instruments. The truth is that there are so many ways you can make money with them, so you may want to start using them in the future.




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