Stock investing has been equated with gambling since a long time. The allegation may partially be true even if it's for wrong reasons. For example, those who lose heavily in stock trading are generally those who do not take to stock investing in a professional manner. They react to the various stock trading developments emotionally.



One can understand a tense emotional response to a position of loss. You are at your wits end when, contrary to your wishful expectations, the value of your stock starts tumbling and appears no end. You sell if off in a state of desperation as if your investment would be totally wiped out. You obviously have suffered the loss and then you remembered the often-repeated comment t that stock investing is gambling.

You tend to forget that the moves made in gambling defy any calculation. They are blind and irreversible. There is no way you can make any amendment once you have thrown a dice.

This is not so in stock investing. Even if you did not sell off your stock when you should logically have sold it and you succumbed to your greed thinking its price would touch the sky, there was no need to feel desperate and sell it off when price started falling. You should have shown patience. You should have understood that the steep fluctuations in stock prices are an inherent part of the game.

Prices fall to rise up again. Conversely, they rise to fall as well. One should not go by emotions and act in a huff.

The emotional stock market investors commit similar mistakes all the time. Instead of setting up an aim to sell off the stock when it has achieved certain predetermined percentage, they succumb to their greed and forget that the rise may be followed by a fall without any apparent reason. There is no such thing as a non-stop rise in stock market.

This is amateurish and unprofessional attitude which invariably results in losses. It brings a stigma of gambling to stock investing. Unfortunately these kinds of losses shall continue to occur especially to the novices and the emotional traders in stock market.

Stock market pundits have been thinking of introducing some kind of trading system which appreciably reduces the chances of losses that new investors and emotional investors suffer.

This is where the ETFs come in.

ETFs stand for Exchange Traded Funds. ETFs are, in fact, the latest addition to the menu of various options for investing in stocks and shares. The phenomena of ETFs as a secure and profitable method of stock investment is spreading across the world like a wild fire.

ETFs have not only caught the attention of the investors in the U S, they are increasingly becoming a more popular mode of stock investment in many other countries such as Asia and Europe. Some of the important financial markets include India, Sweden, Finland, Singapore, Hong Kong, South Korea, Japan and Turkey.

ETFs are progressively becoming an exciting investment opportunity and are destined to replace the mutual funds. Their popularity is now increasing at geometrical rate due primarily to their income potential without the chances of loss that are generally considered as unavoidable accompaniment of stock market investment.

ETFs work like stocks. They have all the advantages of stock investment. You can immediately access your ETFs like any other stock investment account.

You can trade in ETFs, that is, you can buy and sell them like stocks during the normal exchange trading hours. A significant advantage of investment in ETFs is that they are more cost and tax efficient than the mutual funds.

You have to pay the same commission rates to your broker that you pay for your stock trading. There are no minimum buy requirements or holding periods like in mutual funds.

In fact you can buy as little as just one share of an ETF as you can do in case of a stock. They are excellent trading vehicles as against mutual funds.

ETFs offer the same diversification in investment as the mutual funds do while providing the investors the ability to trade in and out of the ETF as and when they like. This is an invaluable benefit.

You can practically eliminate the risks of huge losses that are sometimes associated with stock trading.

There are several different types of exchange traded funds. In fact in the United States alone there are currently over 600 ETFs, and more and more are being added each day.