Why to Trade Indexes?

By taking look at all benefits of the trading Exchange Traded Funds (ETFs) we can define tree main reasons why index shares become one of the most popular investing tool among different type of traders

• Less Capital Investment: You won't need to purchase a mutual fund or an assemblage of stocks to get good performance from an index. You can buy the index directly as easily as a stock, with low commissions, and no need to worry about load!
• Less Volatility: By their nature the indexes are much less volatile than the stocks they represent, as they are an 'average' of many stocks. Therefore one doesn't need to worry about the news and fluctuations of many individual stocks.
• Many Derivatives: When trading an index, you not only get the ability to trade index share (SPDRs, QQQ, Diamonds) but you can also trade index options and index futures. Index options and futures carry far more risk, and of course more gain, but are not as volatile as an individual stock.