So you are looking to get into the world of selling exchange traded funds. In this article we are going to cover 5 vital tips to help you make the most of selling exchange traded funds.

Understand what an ETF is

To be able to buy and sell ETFs you must first comprehend completely what they are and what they entail. An ETF is an investment fund traded on stock exchanges. It runs on an arbitrage mechanism which means that they try to stick as close as possible to their net asset value. It is perfect for beginning investors as it offers a very low risk and a huge range of investment choices.

Get used to the different fees

As with any possible inversion that you might make, you must first get yourself used to the different fees that come along with that type of inversion. There are three main types of fees that you will find when trading with ETFs: management fees, brokerage fees and the buy/sell spread. The management fee is charged by the fund issuers which includes custodian, accounting and audit fees. The brokerage fee which is charged by the broker every time that you make a trade, this is open to variation based on the broker. Finally, there is the buy/sell spread is normally a hidden charge which is the difference between what the buyer is willing to pay and what the seller is asking for.

Use limit orders

Another key thing when trading in ETFs is limit orders. Limit orders allow potential investors to decide on the maximum price that they are willing to pay for an ETF. This presents both pros and cons, as whilst it is useful at times of market volatility the con is that the trade is often not excluded right away. More details!

Trade at the right times

As with everything in life, when it comes to trading ETFs: timing is key. Before starting to trade ETFs do some research into what hours of the day are best to buy and sell ETFs and try and avoid the times when you would make a loss – such as the last 20 minutes of a trading day. By investing a little bit of time in researching the best hours to trade, you will be increasing your profit margins and you will thank yourself for it later on down the road.

Get second opinions from people in the know

This is probably one of the key things when it comes to trading ETFs: second opinions can never go amiss. If you are unsure about a decision that you are going to make, ask a friend or get help from somebody who dedicates themselves to this field. They will be able to guide you and help you make better financial decisions.

 

To round things up, if you are looking to invest in ETFs and don’t know where to start, ask any friends of relatives if they have traded before and if not then hit the web and get professional advice. By doing this and following the above tips then you will be an ETF wizards in no time at all. For more information visit: https://www.investopedia.com/ask/answers/052615/what-difference-between-exchange-traded-funds-etfs-and-closed-end-funds.asp