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Don’t Mistime Your ETF Trend Trading

August 26th, 2013

Since exchange-traded funds (ETFs) have moved more mainstream because of their flexible day-long trading and their tax benefits, many of our clients are flocking to them. We’ll be the first to say that it’s very prudent to add ETF assets to your portfolio. By doing so, you can expand your trading reach into global markets; you can take long and short positions in the direction of trends; and you can come closer to achieving a 3 to 1 profit to loss ratio, which we advocate. However, there are some important things to keep in mind when using these securities for long-term investing.

Secure Your ETF Assets

Well timed ETF Trend Trading
By practicing the few disciplines below, you will be able to gain more momentum with your ETF trend trading and secure a profit.

  • Know that buying and selling too often can erode the cost benefits of investing in this type of security.
  • Avoid the temptation to trade and potentially mistime the market because you have more opportunities to trade throughout the day.
  • Continue to diversify your portfolio. Many investors think by having ETFs, they have diversified. While this is true, ETFs offer somewhat limited diversification because purchases are made around certain sectors
  • Avoid buying only what has gone up, which will most often place you in the position of buying high and selling low.

Besides these ETF trend trading strategies, watch video to learn how to use a simple technical indicator to tell when to buy and sell your ETFs.


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