ETCs, Exchange Traded Commodities, or commodity ETF funds, are special types of funds consisting of commodity futures, the units of which are listed on the stock exchange, just like equities. To the characteristics of a fund, therefore, they unite the practicality, dynamism and usually also liquidity of the shares.
In this article we will try to understand better how to invest in ETC with Plus500, a broker that over the years has built an undoubted reputation and that today can boast of being a very important reference point of online trading.
How to Trade ETFs on Plus500
Trading ETC on Plus500 is not difficult at all. The platform in question relies on the concept of practicality, so even newbies and less experienced traders can use it without any particular problems. The Plus500 interface is intuitive, clean and well structured, and there is no doubt about that.
This means that if we wanted to find the ETC on Plus500 we just need to open the “Trade” screen, choose the ETC category and proceed in this direction, selecting, for example, the country in which you intend to operate or the good on which you want to bet.
Once we’ve done these three simple steps, we can say we’re in the right place. At this point the trader has to decide how to invest and how much, depending of course on the analysis he has previously made and the considerations that he has extrapolated.
What Does It Mean To Buy an ETC on Plus500?
Buying an ETC on Plus500 means opening a Long position, i.e. investing in the fact that the asset to which the fund refers acquires value over time. Those who buy ETC Gold, for example, do so because they are convinced that gold will increase in value by dragging the assets linked to it upwards.
What Does It Mean To Sell an ETC on Plus500?
Unlike the previous case, selling an ETC on Plus500 means to open a short position and then predict a decline in the price. ETC replicates the trend of the share to which it refers, so if you believe that that share will decrease in value, opening a position to sell will be a natural consequence.
How to Finalise an ETC Deal on Plus500
When you have decided how to operate with ETCs, you can then move on to finalization, that is, to the phase in which you set all the appropriate parameters that actually serve to open the position.
Also for this reason we consider important to reaffirm some concepts that could be useful to better understand the trading on line of ETC.
- Contracts: represents the number of ETCs that you want to trade.
- Financial leverage: it represents the volume of business that will be moved starting from the initial investment, so a leverage of 1 to 150 applied moves 15,000 € with an investment of 100 €.
- Margin: is the actual amount of the investment, so the amount of money you are willing to put at risk.
- Stop Limit: this box, if checked, automates a profit taking when a certain threshold is reached.
- Stop Loss: Unlike the Stop Limit, the Stop Loss is used to stop losses, thus expressing the level below which the position will be closed.
- Guaranteed Close: This option, which is not available for all instruments, closes the position in the event of very strong price fluctuations. To be used, however, requires the application of an additional spread.
- Buy/Sell: This button is simply used to execute a bullish and bearish order respectively.
Concluding A Trade: Closing The Position
To open the position you must necessarily click on the button that appears in the order conclusion window. When you want to close the position, click on the “Close position” button that will appear in the main window. By closing the position the trader agrees to take home what will result, so any loss or profit, and should be aware that he can no longer go back.
It is important to note that to close the position, click on the button above (i.e. “Close position”). This warning may seem trivial for some, but in reality there are many cases of people who, for example, to close a position of sign +, open a sign -, convinced that by compensating, the second move cancels the first.
These and other details must therefore be taken very seriously, so we invite you to take a look at our definitive guide to ETC trading.