7 Mistakes to Avoid When Trading Leveraged ETFs

Exchange-traded funds have found their way into countless portfolios, as investors of all types have embraced their cost-efficient, diversified exposure to virtually every corner of the global markets. Given their liquidity and access, active traders have increasingly expanded their playbook to include ETFs, accounting for a greater share of trades. Leveraged ETFs have become especially popular within these groups, but can be dangerous for the inexperienced [see 10 Questions About ETFs You've Been Too Afraid To Ask]. Leveraged ETFs: Fact Vs. Fiction Leveraged ETFs use financial derivatives and debt instruments in order to consistently amplify the returns of an underlying index. For example, the ProShares Ultra S&P 500 aims to provide two times the daily performance of the S&P 500, as compared to the popular S&P 500 SPDR , which provides only one times exposure to the benchmark index. This leverage is made possible through swap agreements and futures contracts [see The Ultimate [...] Click here to read the original article on ETFdb.com. Related Posts: Most Popular ETFs: Leveraged, Financial ETFs Among Winners Daily ETF Roundup: Stocks Higher Despite Disappointing Chinese Data ProShares Adds 3x, -3x Financials ETFs Ten Commandments Of ETF Investing The Shocking Truth About Leveraged ETFs