Exchange traded funds, or ETFs, are essentially mutual funds that are traded as stocks on public stock exchanges. Compared to traditional funds, ETFs make it far easier for short-term traders to profit from price changes in these instruments, as liquidity is instantly available during the exchange’s trading hours.
Binary options brokers, as well as traditional CFD & forex brokers, generally offer ETFs as contracts-for-difference, or CFDs for short. These are derivatives that automatically track the real-time market price of the ETF, and make it possible for traders to trade ETFs with high leverage that can boost profits (or losses). CFDs based on ETFs offered by binary options brokers and others also make it easy to make money on falling prices in these instruments by shorting them.