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Active traders “embrace ETFs and options to help manage risk”

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Active traders remain highly engaged in the market but are looking for ways to better manage risk during the period of record volatility, according to a survey by US brokerage Charles S

Active traders remain highly engaged in the market but are looking for ways to better manage risk during the period of record volatility, according to a survey by US brokerage Charles Schwab.

The latest Charles Schwab Active Trader Sentiment survey polled more than 700 individual investors who trade frequently.

Nearly one in four respondents consider exchange traded funds the most appealing investment vehicle.

Forty four per cent of respondents trade options regularly, 27 per cent of those use options primarily for risk management and 90 per cent intend to maintain or increase the number of trades they make in the next six months – up from 83 per cent in the May 2008 survey.

‘Traders are starting to face the new reality,’ says Kelli Keough, vice president of Schwab’s Active Trading Services. ‘In this market, everything revolves around taking back control and minimising downside risk.’

The survey found that 24 per cent of active traders are now using ETFs as their primary investment vehicle.

‘ETFs, which trade like stocks, can be a good way to gain exposure to sector or industry trends,’ says Randy Frederick, director of trading and derivatives at Charles Schwab. ‘With so many ETFs available, there’s something for most investment styles and strategies.’

The survey also shows that 43 per cent of traders surveyed expect the S&P 500 to rise over the next six months, while 17 per cent expect it to fall and 40 per cent expect it to be flat.

‘The survey results are further evidence that active traders are adjusting to the market,’ adds Frederick. ‘Even in this difficult environment, traders can find opportunities if they know where to look.’

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