Learn ETF Trend Trading. Know Candlestick Charting. Discover Options GPS. You must be interested in knowing what was the most popular stock in the recent years. What would you guess: Google, Microsoft, Exxon Mobil. You will be surprised to know that it was a stock that did not exist 15 years back and even does not represent a company.

The security with the highest traded volume was the SPIDER. But what is a SPIDER? It is the nickname given to the Exchange Traded Fund that represents the value to S&P 500 Stock Index is called the S&P 500 Depository Receipts (SPDRs).

So what are the Exchange Traded Funds (ETFs)? ETFs are the most innovative and successful financial instruments of the last two decades. ETF shares are issued by an investment company that represent and underlying portfolio.

ETFs are traded just like stocks throughout the day on an exchange. Just like stocks, the prices of ETF shares are determined by the underlying fundamentals of supply and demand. There has been an explosive growth in ETFs.
Spiders were the first ETF successfully launched in 1993. Spiders (SPDR) closely follow the S&P 500 Stock Index. Soon they were joined by the Cubes (QQQ) ETF that mimics the NASDAQ-100 Index and the Diamonds (DIA) ETF that closely follows the Dow Jones Industrial Average (DJIA).

At the end of 2006, ETFs assets totaled something like $420 Billion. This maybe a small fraction of more than $10 trillion invested in the different mutual funds but ETFs have grown more than 300% since 2002 and it is expected that their popularity will rise more.
ETFs now not only track the well known stock indexes but now also track various sector indexes as well as customized indexes and even actively managed portfolios. There are several advantages of ETFs over mutual funds. Unlike mutual funds, ETF shares can be bought or sold anytime of the day.

These ETFs track their respective indexes extremely closely. For Spiders and cubes the bid/ask spread can be as low as 1 cent. Market makers, institutions and large investors called Authorized Participants can buy the underlying shares of the stocks in the index and deliver them to the issuer in exchange for the ETFs and deliver units of ETFs in exchange for the underlying shares.

An investor can sell ETF shares short hoping to profit from the market fall. This can be a convenient hedging strategy. So there are many advantages to ETFs. There are tax advantages to ETFs. ETFs are considered to be extremely tax efficient.

ETF trading can be exciting only if you understand ETFs and can locate the hottest ETFs in the market. Meet Big A a former hedge fund manager who has an ETF trading news letter that can give you a lot of valuable information on ETF Trend Trading.