Trading ETFs is just like trading stocks — literally. You place a buy or sell order with your broker, and he fills the order for you, adding the securities to your account when the transaction is closed. Whenever the market is open, you can make a trade. And just like stock orders, you can add conditions to your ETF trading orders. For example, you can place a limit order for an ETF, just like you would for a stock. In fact, everything you can do to order a stock trade, you can do to order an ETF trade, from time-sensitive to price-driven orders.

Many investors take an active approach to ETF trading, which is much less common with mutual fund holders. Though the ETFs themselves take a passive investment approach, simply tracking an existing index, traders can buy and sell ETF shares in the same way they would with individual stocks. People who do this are typically trying to beat an index, but their profits can be eaten up in trading commissions — and their strategy may turn out to be less profitable than simply following the index.