ETFs (Exchange Traded Funds)
An ETF (or Exchange Traded Fund) is an investment/trading instrument that can track an index (such as the DOW or S&P 500) or a commodity (such as gold or crude oil) and trades like a stock on an exchange. There has been a great proliferation of ETFs over the last 10 years (I'm writing this in 2012), and this has given the average investor with a computer the ability to trade just about any financial market they choose with great ease. This can be accomplished by simply opening an account with either a full service or discount stock broker, choosing an ETF that is related to the market you wish to trade (such as gold or a broad stock market index like the DOW) and then specifying the ticker symbol of that ETF to your broker to buy and sell within that market. Unlike a mutual fund, an ETF trades like a stock, so it can be bought and sold quickly (even intraday) and is thus ideal for short-term traders who require precise timing in their trading.
The Alternative Investor has traded the four major markets discussed on this website (broad stock market, crude oil, gold, and silver) for the last eight years exclusively with ETFs and has found this to be a fast, convenient and efficient way to trade these markets. I strongly encourage traders and investors to do their own research on the internet to find an ETF best suited to them and the market they wish to trade.
IMPORTANT !!! : Take note that there are ETFs that make a profit when the market that the ETF is tracking goes up (long ETFs) and those that make a profit when the market the ETF is tracking goes down (short ETFs). For obvious reasons be careful not to mix these up when trading - know which direction you want to trade (up or down) and select the appropriate ETF (long or short).
IMPORTANT !!! : ETFs are not investment instruments designed to make a profit under all market conditions. They simply move in the direction of the market they are tied to (e.g. oil, gold, the DOW, etc.) and will perform only as well as that market performs. The decision to buy or sell a particular ETF is based on how you think that market will be moving, and of course there is a risk of loss if the market doesn't move in the direction you anticipate.
IMPORTANT !!! : Be aware that there are leveraged ETFs that double or even triple the gains (or losses) of the market the ETF represents. These leveraged ETFs have advantages and disadvantages and should only be used short-term by traders who have very high confidence in a particular market movement. Always remember that the leverage factor in these funds works in both directions and can produce rapid losses as easily as rapid gains!