3 Answers

ETF stands for Exchange-Traded Fund. It is a security that tracks an index, a commodity or a baskets of assets like an index fund, but trades like a stock on an exchange.  ETFs experience price change throughout the day as they are bought and sold.

Just to add to Benchong's good description of ETFs, this product, in the last few years, has bloomed into many categories.  Like Ben said, ETFs hold baskets of assets, hence, if you're interested in an ETF that holds only gold mining companies, you can look into an ETF with the ticker GDX as opposed to buying a mining company such as Newmont Gold (NEM).  Conversely, you can now buy an ETF that specifically holds, say medical diagnositic companies only, instead of having to buy a certain company.  You may want exposure to foreign countries, you can choose to buy ETFs like EWZ (Brazil) or EWY (Korea).

Lastly, you can purchase double short or double long the indexes.  For example, you can buy SKF or double short the financials.  If the financials drop by 1%, your doubt short will increase in value by 2%, doing the double short on the broad market like SDS.

The riskiest ETFs provide for triple short or triple long the indexes.  This can kill you if your timing is less than perfect.

could mean estimated time of finish