What are ETF shares?

Exchange traded funds (ETF) are index funds or trusts which are listed on stock exchange. So every trader can buy or sell their shares easily. Each ETF share represents group of several stocks shares (or another asset like commodity, currency).

ETF trader can easily participate on performance of several different indexes - broad based, sector based, international - or bonds or even commodities or currencies.

ETFs are very popular now as they offer good choice for trading several markets very easily. It is now possible to buy "index ETF" and participate on performance of such index. Trader need not to buy every stock in index in predefined amount - he can easily buy index based ETF !

ETFs have also several others advantages :

• no problem with liquidity

There is no problem with liquidity of ETF stock. Bid and ask are always calculated from prices of underlying stocks. So it is not necessary to have good trading volume in ETF.

• reduced risk

Individual stocks can make wild swings sometimes. Important news can move price of individual stock down rapidly. Not in ETF. Every individual stock is only part of basket of ETFs stocks, so such move in one stock will not produce huge move in ETF share value.

There are several companies issuing ETF shares. It is on every trader which one will be used for trading.

I noticed that technical analysis has been working with ETF much better then with individual stocks.

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