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ETF Trading

ETF by TradeFW broker

Exchange-Traded Funds Offer Lower Fees and Higher Daily Liquidity

You’re already familiar with stocks, forex, indices, and a probably a number of other options as well. But TradeFW offers you another type of investment to add to your portfolio that is also worth considering. It’s called an exchange-traded fund (ETF).

To best explain what an ETF is, let’s start with a more familiar term, namely a mutual fund. A mutual fund is a collection of assets funded by a pool of money collected from many separate investors that is invested in multiple securities such as stocks, bonds, money market instruments, and other assets. A mutual fund can include anywhere from 100 to 3,000 different securities. The variety is a means for insulating the investor from unexpected dips in the value of one of its specific components.

Like a mutual fund, an ETF enables multiple individuals to combine their investments in order to build up a portfolio that can include dozens of indices, commodities, bonds, and baskets of different assets. Unlike a mutual fund, however, an ETF is traded like a common stock on a stock exchange − hence its name. Like a stock, ETF prices fluctuate throughout the day as they are bought and sold.

What’s the Difference between a Mutual Fund and an ETF?

The main difference between these two investment options is that a net asset value (NAV) is not calculated for an ETF at the end of every trading day like it is for a mutual fund. What that means in simple terms is that management salaries and other operating expenses are not subtracted from the total value of the asset before that figure is divided by the number of shares. It’s a lot simpler to calculate, which means it’s a lot easier to understand, especially for the novice investor. But the main benefit is that a sudden, unexpected rise in operating expenses does not dent the day’s value of the investment itself.

Perhaps most importantly for individual investors like you, however, is that TradeFW ETF trading is provided to you at a lower fee than you’d otherwise pay and yields a higher daily liquidity.

Investors capable of making large trades enjoy yet another advantage. They can become “authorized participants” and, in that capacity, can offer to purchase securities the ETF is holding itself and exchange them for shares.

TradeFW Leverage Trading

Should you opt to invest in ETFs, keep in mind that you will still be able to take advantage of TradeFW’s leverage trading. Leverage is a crucial investment strategy through which TradeFW loans you the funds to increase the potential return on your investment. If you’re confident about this opportunity of a particular purchase of an ETF, leverage trading enables you to magnify that potential profit far beyond what you would otherwise be able to achieve using your own money alone.

Leverage trading is yet another example of how TradeFW goes the extra mile to assist investors like you.

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