Understanding Exchange Traded Funds: ETF's

Most investors today have something called Exchange Traded Funds (ETF) in their portfolio. ETF's were essentially non-existent 10 years ago, but now they dominate a major portion of trading on the stock exchange. They have made a tremendous impact in markets like gold (GLD) and silver (SLV) by creating a liquid market for investors to speculate on the direction of prices. 

Most investors have a limited understanding of how these funds actually work.  The following video provides an excellent and simple demonstration on everything that goes on behind the scenes when you push buy or sell on your computer.