Although exchange traded funds (ETFs) have traditionally been used mainly as long-term investments, CFDs have made it possible to trade these funds on a short-term basis as well. Traders can also take advantage of the leverage in the CFD contracts to make much larger profits (and losses) than what would have been possible by investing in these instruments through a traditional stock broker.
ETFs are well-suited for traders who like to follow specific industries instead of just single companies. Since these funds eliminate what’s known as company-specific risks, they are safer alternatives for traders who want to take a bet on the direction of an industry as a whole. Common ETFs offered by CFD brokers include the “GLD” gold ETF and the “SPY” S&P 500 ETF.