Best ETF Trading Strategies For Traders To Consider

23 November 2022

Exchange-traded Funds (ETFs) offer diversification, low cost and flexibility. They are also well-suited to a variety of trading strategies, ranging from basic to advanced. Here are five of the best.  Exchange-traded Funds (ETFs) is a highly popular asset class among investors and traders. In 2021, the global ETF market hit a high of USD 10 trillion, with the number of ETFs reaching nearly 8,600.   

Particularly impressive, considering this growth continued unabated even in the face of strong global macroeconomic headwinds sparked off by the COVID-19 pandemic.  

But what lies behind the enduring popularity of ETFs? And how can traders and investors trade them? 

What are ETFs?

ETFs are a type of investment fund that typically track a broad range of securities or assets. They are so-named because they are traded on an exchange, just like stocks; this allows the price of the ETF to change throughout the day as trades are made. Just like mutual funds, ETFs are pooled investment vehicles. This structure affords investors with lower fees and lower capital to start. Buying into an ETF allows you to gain exposure to every security in its portfolio, making for a convenient way to diversify your investment portfolio.  

The key difference between mutual funds and ETFs is the frequency of trading. As mentioned, ETFs can be traded several times throughout the day; meanwhile mutual funds are only traded once per day.  

As such, ETFs have comparatively more flexibility and liquidity, making them suitable for beginner investors and seasoned traders alike.  

What are the different types of ETFs?

ETFs can follow any of a myriad collection of compositions, drawn from across the entire universe of securities and investment assets. This vibrant variety is also a major reason for ETFs’ popularity.  

Some common types of ETFs include: 

How to trade ETFs? 

ETFs may be traded in multiple ways, with each suited to different investment objectives, budgets and risk appetites.

What are the different ETF trading strategies?   

Trade ETFs with Vantage

Vantage offers Contracts for Difference (CFDs) trading for some of the top ETFs – including Invesco QQQ Trust (QQQ), SPDR S&P 500 ETF Trust (SPY), and the Vanguard Total Bond Market ETF (BND). Vantage comes with leveraged trades, mobile trading platforms for on-the-go-trading, and a range of risk management tools. Sign up to trade ETFs with Vantage today. 

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