Insightful Details about ETF and Options Trading Under PMS

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Sep 28 | By InfiWealth | 216 Profile Views | Comments: 0
Insightful Details about ETF and Options Trading Under PMS

ThePMS Consultant in Mumbai mainly provides wealth and assesses management services giving out advice on Binary Trading, SIP, Forex Trading etc. Today under thePMS Consultant in Mumbai quora we will discuss the forex trading content where we will mention the types of forex trading. ThePMS Consultant in Mumbai and all other PMS Advisors are mainly registered under the SEBI. Today under this forum we will talk about two topics, Option Trading and Exchange Traded Funds

What is an ETF?

An Exchange Traded Fund (ETF) is a collection of securities that you buy or sell through a brokerage firm on a stock exchange. The securities underlying an ETF commonly track and follow an index, although this doesn’t limit the securities to be only stocks as ETFs are commonly composed of a mixture of stocks, bonds, commodities and various other assets.

An easier way to understand an ETF would be to think of it as similar to a Mutual Fund, however, the key difference being that an ETF is listed on the stock exchange and thus is traded throughout the day at varying prices, making it far more liquid and easy to monitor than the average Mutual Fund. This liquidity and availability is where it derives the name “Exchange Traded Fund”. 

What is Optional Trading?

 

Options Trading: Options trading is basically a contract that enables an investor to buy or sell any basic asset or instrument at a specific price given over a period of time. The buying and selling of the options depend upon the options market which mainly trades, contracts which are based on securities, now the Technical indicators in finance is an analysis of mathematical calculations that are based on historic price, volume, and open interest information which aims to predict the financial market direction.

 

Pros of ETF

    Lower expense ratios – ETFs contain a variety of investment instruments and since instead of purchasing all of these stocks individually, you are purchasing a single mixed asset, it saves a lot in terms of brokerage fees and expense ratios

    Diversity – Having a range of assets helps mitigate any severe downturns faced by the market, protecting your portfolio and minimizing your losses. ETFs offer a level of diversity not available through most other assets.

 

    Liquidity – Due to them being traded on the exchange, the funds are very liquid, as compared to Mutual Funds, and hence offer the investor with the opportunity to cash out any time when and if needed.

Indicators of Options Trading

 

     Intraday Momentum Index: Intraday momentum index is a technical indicator that is used mainly for high-frequency option traders who mainly look to bet intraday moves. It basically combines the concepts of intraday candlesticks and relative strength index, therefore providing a certain range for intraday trading by indicating overbought and oversold levels. Using this indicator the options trader may be able to gain a potential opportunity to start a bullish trade in an up-trending market or start a bearish trade in a down-trending market at an intraday price.

 

     Money Flow Index: It is a momentum indicator that combines price and volume data and is also known as a volume-weighted relative strength index. It basically measures the inflow and outflow of money in an asset over a specific period of time which is basically an indicator of ‘trading pressure’.

 

 

 

 


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