Want to learn how to trade in trackers? In this article we explain how you can learn how to trade. Knowledge is important, but before you can put your knowledge to the test you can practice online. This way you can test what you know and improve as a trader. Open a free demo account with one of the brokers to start practicing now!
What are trackers and what can you do with them?
Before you start trading trackers, you must know what they are. Trackers are also known as index trackers and as ETFs (Exchange Traded Funds). This trading product has been available in Europe since 1999. Most ETFs follow a special index, which is why they’re called index trackers. They have a special goal in mind: they want to be more stable than the prices of regular stocks.
This stability is possible because trackers follow a general index (for example the Dow Jones). As an investor you can never lose more than what has been lost on the exchange in the ETF, on average, during the day. This can be done by buying a bundle of representative stocks from that index. This gives you more certainty as a beginning trader, which is one of the main reasons trackers have become very popular trading products.
Short and long
Short and long are two very important terms on the trading front. When the value of an index goes down or goes up, a profit can be made. There is a slight downside as you have fewer options in the underlying value. It’s somewhat of a collection of the most important stocks. But the benefit is that it is a stable investment.
That’s not all; it also makes for a consequently higher return at a relatively low risk. Unfortunately, not all brokers sell ETFs, but it can be very interesting for beginning, private traders. Whether or not you can follow a tracker depends on your broker.