ETF trading platform in the Philippines
An Exchange Traded Fund (ETF) is a basket of investments that, like stocks, is traded on an exchange. ETFs are commonly used to track a specific market index. Therefore, they are also called index funds. There are also traditional mutual funds that focus on a specific index and duplicate it. The difference between ETFs and traditional mutual funds is that unlike funds, ETFs are passively managed.
ETFs have their own advantages and disadvantages. The advantages of investing in ETFs include: low (or zero) commissions, since you do not need to pay an offline broker; the possibility of diversification, since there is no need to select and buy individual shares (which in general is much more expensive), but instead there is an opportunity to invest in a full package of financial assets; Choice of investment direction: you can invest in specific sectors, from ETF tracking the IT development index to ETF tracking the livestock index, and so on; no requirements for the volume of investments, which means that investors in this ETF can buy one share or many; ETFs provide access to a wide range of securities, including bonds, foreign market indices, commodities and currencies. ETFs are traded like stocks: they can be bought and sold throughout the trading day.
What should be the trading platform for ETF trading? After analyzing the brokerage market, we have chosen, in our opinion, the best investment trading platform for trading ETFs.
The topic of today's quick overview is the best ETF trading platform in the Philippines.
How to Invest in ETFs in the Philippines?
You can only invest in ETFs in the Philippines through online investment platforms. Where to begin? First, you need to find a reliable broker who will act as your middleman on the exchange.
Choose only a licensed broker after examining their professional reputation and experience in this area.
The next step is to register on the online trading platform that this broker offers for work. To do this, you need to go to the official website of the selected brokerage company, click on the "registration" option and enter the data into the opened registration form. Initial registration requires only minimal information such as a username and a valid email address. After confirmation of registration, which occurs through a standard automatic link sent to you by the system to the specified email, your account is ready to use.
This is usually the standard registration option on most platforms.
On the platform we have chosen, you can additionally register using social networks, the corresponding icons can be found at the bottom of the registration form.
The main difference of a high-quality online platform is the availability of a demo account.
We have a demo account on our platform. You can use a demo account to practice trading without risking your own funds. All operations from a demo account using fictitious money are automatically debited by the system immediately after registration. In our case, this amount is $ 10,000. Also, if necessary, this amount can be renewed an unlimited number of times. Using a demo account is free and has no time limits.
Also, this platform offers simple and affordable methods to fund your account. It is clear that in order to start real trading, you will have to make a real deposit to your real account. It's easy to do, just click on the "Make a deposit" option and select one of the payment methods offered by the system. You can do this with a bank card or one of the online payment systems. Transfer and crediting of funds is instant. Using the same methods as when enrolling, you can easily withdraw the claws from your account. However, the system may request additional data for verification, for example, scans of your identity documents. This is done to ensure the safety of your funds.
The platform we chose has a wide variety of funding options, instant payment processing and low limits. The minimum deposit amount is $ 10 and the minimum withdrawal amount is only $ 2.
Once you sign up on the online platform, practice on a demo account and then make a real deposit, you can purchase ETFs. Which fund should I choose? Below we will take a closer look at what types of ETFs exist, what their classification is, and what ETF options the platform we are considering offers.
Types of ETFs
There is a lot of variety in the ETF world today. Experts identify several types of exchange-traded investment funds, including the following:
- Market mirrors the structure of a particular stock index.
- Bonds invest in various types of government, municipal and corporate bonds with fixed income.
- Sectoral ones follow the structure of the index of a particular sector (for example, oil refining, high technology or pharmaceuticals).
- Commodities track the exchange prices of a particular commodity, from precious metals to grain.
- Styles are focused on a specific style of investing (for example, tracking different market capitalizations of companies, growth or index value).
- Regional, as the name suggests, track the indices of the securities of a particular country or geographic region.
- Inverse are oriented towards a "short game", profiting from a decline in a particular market or industry index.
- Actively managed, unlike others, do not follow a specific index, but form an investment portfolio using their own algorithms.
- Exchange-traded bonds (ETNs) - a type of debt issued by a bank, the distinctive feature of which is that its value is tied to the exchange price of an asset (for example, a certain type of securities or precious metal). Accordingly, the value of the liability rises or falls with the value of the asset. Designed as a highly liquid instrument to access markets that are themselves illiquid and to avoid the taxes that you would have to pay if you were the actual owner of an asset.
- Alternative investments provide an opportunity to invest in non-traditional assets or strategies (for example, investing in art, wine, or trading volatility).
It is wise to choose a group of foundations that are engaged in activities that you understand. For example, if your primary business is IT, choose a suitable ETF such as the SPDR Select Sector Fund, which is a US-listed exchange-traded fund that tracks the Technology Select Sector Index. ETFs include large and mid-cap technology stocks. The largest investments are made in the United States. By choosing a fund that tracks direction that you understand, you are more likely to be able to understand market trends.
Options for ETFs on the platform
The platform offers a choice of 23 ETFs to invest in. Here is some of them:
- Invesco QQQ Trust Series 1 QQQ - PowerShares QQQ Trust Series 1 tracks the NASDAQ 100 index, weighted by modified market capitalisation. The ETF reflects how some of the largest technology companies trade their stocks. The stock is managed by Invesco PowerShares, which specialises in the technology and consumer sectors. QQQ's large capitalisation and volume make it one of the best known and most traded ETFs in the world. Due to its composition, the fund is highly exposed to the technology sector, which accounts for about 62% of its assets under management. As a result, the index's performance is heavily influenced by the performance of technology stocks such as Apple, Microsoft, Facebook, Google and other technology stocks. With this distinctive composition, the fund combines popular technology with growth and high capitalisation, and its liquidity and name after the NASDAQ 100 index make it very popular and attractive to investors.
- iShares MSCI Mexico ETF EWW - iShares MSCI Mexico ETF operates in the US. The ETF seeks to provide investment performance in line with the MSCI Mexico IMI 25/50 index. The fund invests in Mexican companies that make up the Mexican stock market index, but with different weights due to certain limitations. The fund can be described as an ideal investment vehicle for investors interested in increasing their exposure to the Mexican stock market. As a result, fundamentals such as earnings announcements for large local stocks, interest rate expectations and inflation expectations related to the Mexican economy are the most important factors affecting the ETF's performance.
- iShares Russell 2000 ETF IWM - iShares Russell 2000 ETF - is an exchange-traded fund that trades in the US. This ETF follows the performance of the Russell 2000 index fund. Specifically, the ETF holds mid- and small-cap US equities. The ETF's holdings are updated annually based on market capitalisation. The fund invests primarily in companies in the Russell 2000 Index, offering investors a low-cost alternative (0.2%) to obtain diversified investments in small-cap stocks. The performance of the funds is influenced by the overall performance of these companies, which by definition are more volatile than the large-cap stocks that form other indices, such as the S&P 500. Factors such as prevailing economic conditions, inflation expectations, investor sentiment on interest rates and firm-specific factors are most important to a fund's future performance.
- SPDR Select Sector Fund - Consumer Discretionary XLY - Consumer Discretionary Select Sector SPDR Fund - is a US-listed exchange-traded fund. The ETF tracks the performance of the Consumer Select Sector Index, which primarily counts large-cap companies listed in the US. The ETF values its assets using a modified market capitalisation approach, typically investing at least 95% of its assets in the index. The ETF reports a strong year-to-date return or 13.90% as of 17.08.2018, exceeding the S&P index return of 6.25% over the same period. The ETF's performance is highly correlated with the performance of large-cap companies in the consumer discretionary sector, which implies that any negative impact in this sector would definitely affect the fund's performance. In addition, other factors that could affect ETF performance are tax reforms (similar to early 2018) and some macroeconomic factors (US economic conditions, interest rates, etc.) which could affect consumer spending.
In addition to the examples above, you will find other ETFs on the website. As mentioned earlier, you can choose a fund that tracks a sector whose direction is close to your line of business.
Benefits of the ETF trading platform
One of the main advantages of the platform we have chosen is its informative and user-friendly nature. Whichever fund you choose to invest in, you will find a brief overview of the fund, current prices, analysis of its performance, statistical data broken down by period, the amount of leverage the broker provides on the fund and the "Traders' Sentiment Scale", an indicator that statistically reflects the asset's trend.
News feed for fundamental analysis
Speaking of informative, it is also worth noting that the platform offers a "News" section, which gathers the latest news from reliable sources. Thanks to the platform's flexible and user-friendly settings, you can read the news on the platform from the home page or access the news section directly from the trading room. You can also set up the news feed to be played directly while you make trades and view quotes charts, which will be displayed in the left panel. This way you won't miss any important news and you don't have to spend too much time browsing news websites. This is certainly very convenient.
Availability of indicators for technical analysis
In addition to news that contributes to fundamental analysis, you will also find over 100 of the most widely used technical indicators and widgets on the platform. You can use one or more indicators at the same time, or open several working windows with different indicators for comparison.
Always be aware of what is happening in the financial markets with customizable price alerts. This is convenient and ensures you don't miss important market movements.
Possibility of applying stop orders
Protect your trades with a stop loss and take profit.
A stop loss is an order to the broker to close the current position if the loss reaches a set value. In other words, if the market goes against us, we can be sure that the loss will not lead to a total loss of the deposit. Use the stop-loss feature when switching to avoid big losses To avoid a big bang, we recommend that you place a stop-loss when investing in a product. You will then automatically sell if the share price reaches a certain point. This greatly reduces the risk of losing a lot of money.
Take-profit is a reverse pending order, when triggered, the position will be closed at the current profit level. Automatic profit taking is especially important for news and scalping strategies, where the desired momentum may last several minutes or even seconds. There is no way to close an order manually in such a short amount of time.
In addition to the demo account, which will allow you to practice trading, the platform also has a separate section with video tutorials. Here you will find all the video lessons you need to understand the intricacies of the investment business. This section includes both basic information on the basics of online trading, as well as more advanced lessons on using various indicators for analysis and derivatives trading. The lessons are written in a very clear manner, with practical examples and a clear demonstration on the charts. We recommend that you go through all of the lessons and put your knowledge into practice, using a demo account.
The training section is another plus on the platform.
Other benefits of the platform
In addition to easy registration, the availability of a demo account and training section, the availability of a current news section, as well as indicators for analysis and the possibility of setting stop orders, the platform also attracts with its flexible and user-friendly settings. You can change the background colour and style of the charts, choose the number of windows, the order and size of them, choose which types of alerts to enable or disable and so on. Thus every trader can customize the platform in any way they like. In addition, the platform features a live chat for communicating with other traders - you will see a live feed with messages in the left panel. You can also disable the chat if you wish. The privacy settings allow you to hide your real name if you like.
Should you have any questions or technical problems, the support chat is at your service. Support is available 24/7 and is available in 17 languages.
With all of the above benefits in mind, there is every reason to believe that this is the best ETF trading platform in the Philippines.
Open a demo account and see for yourself how convenient and practical this platform is!