Exchange Traded Funds (ETFs) are bought and sold like stocks in the stock exchange and can be traded all day at current market prices. Unlike conventional mutual funds where you buy your shares from a fund company and sell them back to the company, to buy and sell ETF shares you must trade in the market like you would for any individual stocks. ETF investors typically use a broker when they want to buy and sell ETFs. Only big institutions deal directly with ETF providers.

Buying and selling ETFs is just like buying and selling individual stocks. The process involves choosing either an individual broker or a brokerage firm, setting up an investment account, and trading in the ETF market using that account. If you already have a broker or brokerage firm, ETFs can be bought through that service.

To begin buying and selling ETFs, you will be required to fill out an application form and deposit a certain amount of cash in your account. The typical deposit amount can vary but is usually a minimum of $1,000. Once deciding to buy or sell a particular ETF, you will have to call your broker or place the trade using your brokerage firm’s Web site. An ETF trade will usually take effect immediately. If you are buying, the cash in your account will convert to the number of shares being bought. If you are selling, while the trade will be executed immediately, it will take about three days for the shares of the ETF to convert to cash. Visit the MSN Money Web site at Moneycentral.msn.com and NASDAQ at Nasdaq.com to obtain ETF quotes, charts, performance, and ETF trading.

Each individual ETF has a net asset value (NAV). The NAV determines the price of a single share at any particular point in time. The NAV is arrived at by calculating the total market capitalization of the stocks in the ETF portfolio including dividends or interest, minus operating costs, and divided by the number of fund shares. The NAV is not a fixed value, and it will reflect the movements of the stocks in the ETF.