Is it hard to trade ETFs? What do you look for when you trade them?

Question

Is it hard to trade ETFs? What do you look for when you trade them?

Answer 1

The advantage is that trading EFTs is very similar to trading stocks.  So, you don't have to worry about paying capital gains taxes until you sell your EFTs.  With mutual funds, you can have a losing year and still end up with a tax liability due to the trading activity of the fund manager.

But, if you are buying and selling frequently, EFTs will cost more than a comparable mutual fund.  Each time you buy and sell, you are subject to paying commissions.

If your money is in a tax-advantaged account, such as an IRA, and you are making incremental deposits or withdrawals, you would probably be better off with an index mutual fund.

If, on the other hand, you are not in a tax-advantaged account, and you will not be buying or selling frequently, you probably will be better off with an EFT.  The most popular EFTs are based on popular indexes.  The SPDR is based on the S&P 500 and CUBES is based on the NASDAQ 100.

Answer 2

Not hard to trade at all. Some of the better investments are formed under an ETF. Also, ETF's allow you to specialize in specific areas. I enjoy and know most about gold, silver and currencies.

ETF's allow me the flexibility where I don't have to watch the markets constantly. Some great places to start are CurrencyShares and Sharebuilder that allow you to dollar cost average.

Answer 3

Trading ETFs is the same as trading common stock shares. It is actually safer because given the diversification in them, they don't go bust as easily.

Answer 4

I use the same criteria to trade ETF's as I do stocks.  It's based on technical analysis.   Trendlines, patterns, MACD, ADX, SS, MA's & sometimes candelsticks.

A great site to start to get a feel for technical analysis is;

http://www.alphatrends.net/

Answer 5

ETF's (Exchange Traded Funds) are mutual funds that trade like stocks.  

When you buy a mutual fund you purchase it at one single price  that is calculated at the end of the day after the stocks within those funds stop trading.  You purchase it from the mutual fund company, either directly or through your broker.  You do not know the price of the fund before you buy it.  Your order has to be in prior to the markets close and the funds pricing.

An ETF like a stock can be purchased at the current market price which fluctuates throughout the day.  You can use stop and limit orders to buy at a specific price, or a market order to buy it right now at whatever the current market price is when your order is executed.

A good way to trade ETF's is by market sector.  If you think medical industry stocks in general will rise, they you can buy a ETF that is based in medical stocks, there are tech sector ETF's, pharmaceutical ETF's, energy sector ETF's.  There are also broadbased ETF's that trade like market indexes, or international ETF's

A good place to start is the American Stock Exchange were the majority of ETF's are traded and a good family to look at might be SPDRs.  But don't count this as investment advice... just a place to start looking

www.AMEX.com  is the website for the American Stock Exchange

along the left hand side is a link to ETF's

Happy Investing