Why do you think ETF is right for naïve traders

Discussion in 'Finance' started by Priyana Satpo, Jul 30, 2018.

  1. Priyana Satpo

    Priyana Satpo New Member

    You always hear the words ‘It is impossible for the naïve traders' but what about ETFs? Are there any special reasons why only it is possible for the naïve traders to trade? Most traders in the United Kingdom recommend ETFs for naïve reasons. They emphasize the fact that it is possible even for the naïve traders to handle ETFs. It can be pretty shocking, but it is kind of true. Even though some traders say that ETFs are complex it is not the idea of the majority. Most numbers of traders believe it can be traded easily. The naïve traders would be able to understand the way how it works. Investors are grateful that they found something like ETFs, it is highly beneficial. There are many reasons why it is beneficial. Even for some naïve traders, this cannot be a good choice because ETFs need a lot of attention and knowledge. Basically, there are some naïve traders who can hardly focus on trading. So, it depends on the person who is trading. It is all about the way you understand trading. If you know to tackle trading according to the market condition you would be able to trade like a pro.

    The risk involved in leverage trading accounts
    We all know by using the leverage we can easily secure big winners. But if you make a small mistake in the calculations of risk factors, you might even blow your account. Unless you have extensive experience with the volatile market you should never trade with high risk. Try to learn the art of trading by using the virtual dollar. Professional brokers like Saxo is now offering demo trading accounts so that the new traders can easily learn from their mistake. You need to consider this environment as your practice field and develop a balanced trading strategy. If required, seek help from the expert mentors and go for the paid trading course. Unless you know all the factors of this market, you should never trade with real money.

    The intraday liquidity
    There are many reasons why it is possible for naïve traders to trade the exchange traded funds. But some of the highly important factors will be discussed in this article. You should focus on these factors to understand the depth of trading the ETF market. So, the foremost factor is intraday liquidity. What does intraday liquidity mean? It means you have the opportunity to trade ETFs at any time of the day! For example, if you feel like that the market isn't supportive you would be able to exit before that. But on the other hand, the mutual funds work differently. In mutual funds, you cannot exit from the trade like ETFs. You should wait until the trade closes. This can lead to higher losses. However, you should focus on this reason as much as you can! You should learn more about intraday liquidity to gain better exposure of the market.

    The lower costs
    Compared to mutual funds the ETFs have lower costs. If you are buying mutual funds you would have to focus on a lot of paperwork. You might have to complete all these documents which can be hectic as well as costly. But if you are focusing on ETFs, you don't have to bear cost like mutual funds rather you have to with the brokerage account. All the paperwork would be done by the brokerage firm. Actually, less paperwork means you don't have to bear any costs. This can be the scenario most of the time.

    The transparency
    The ETF has the higher level of transparency. It is possible for the investors to know where and what are the types of investment. The information is disclosed on a regular basis. This is one of the reasons why it is possible for the naïve traders to trade the market without much difficulty. As a naïve trader, you should consider all these factors before you enter the market!

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