ETF Trading System For Beginners
The type of ETF trading system that a person chooses is going to be a personal choice that will involve many variables. Depending on whether a person wants to invest in a software program, subscribe to a service, do the research on their own, or use a system that they come up with. There basically is no standard system that everyone uses when they trade.
The effectiveness of any trading system that one uses will depend a lot on the type of trading they are doing and the baskets they are trading in. A system that is geared for long positions will not do as well in a short position sector. So, a trader who is diversified in Leveraged or other types of risky ETFs will want to be able to adapt their system to meet the needs of the sector they are in.
When selecting a system, it is important to remember that there is no magic trading system out there that will be effective all the time. When people start using a system that they have been told is the magic bullet they are disappointed and frustrated very quickly. The ETF is made up of millions of small moving parts that each affect the trades taking place. A system that may work for one person might not be as effective for another. Finding the system that works for you will be developed over a period of time as strategies and systems are tried and discarded or altered.
The easiest system to start with that provides minimal risk and will get a traders feet wet is the EMA system. EMA stands for Exponential Moving Average. It involves following trends, and has a pretty decent risk rating. The ETFs most traded using this system are TLT, XLF, SMH, RTH, and a few others.
Using the system, a trader will go long when the fast EMA crosses above the slow EMA and the short when the reverse occurs. A trader has to leave or reverse positions on the day after the fast and slow EMAs cross. After deciding the days for the EMA (usually about 15), a person must stick to them.
As easy as this system is a person will have to do the research on the sectors they are considering and follow their trends to make effective trades. Setting buy and sell limits will help to keep the trading on track.
A good rule of thumb is to set a risk allotment. Set the percentage of the total capital that one is willing to risk on any one position, then stick with it. When the account reaches the minimum don't add more fuel, just move on. The other rule is to set the number of losing trades in a row that will be accepted, then cut back by a set percentage after that loss has been reached.
The most effective ETF trading system will be the one that works for the individual using it. When looking at different systems one must be as analytical as when they are planning on trading in a sector. Find out the consistent success of the system and how it worked in the sector that one is considering using it in. By discussing systems and strategies with a person who has knowledge of ETFs, trading strategies and systems, a person will be able to achieve successful trading within a short time. - 23212
The effectiveness of any trading system that one uses will depend a lot on the type of trading they are doing and the baskets they are trading in. A system that is geared for long positions will not do as well in a short position sector. So, a trader who is diversified in Leveraged or other types of risky ETFs will want to be able to adapt their system to meet the needs of the sector they are in.
When selecting a system, it is important to remember that there is no magic trading system out there that will be effective all the time. When people start using a system that they have been told is the magic bullet they are disappointed and frustrated very quickly. The ETF is made up of millions of small moving parts that each affect the trades taking place. A system that may work for one person might not be as effective for another. Finding the system that works for you will be developed over a period of time as strategies and systems are tried and discarded or altered.
The easiest system to start with that provides minimal risk and will get a traders feet wet is the EMA system. EMA stands for Exponential Moving Average. It involves following trends, and has a pretty decent risk rating. The ETFs most traded using this system are TLT, XLF, SMH, RTH, and a few others.
Using the system, a trader will go long when the fast EMA crosses above the slow EMA and the short when the reverse occurs. A trader has to leave or reverse positions on the day after the fast and slow EMAs cross. After deciding the days for the EMA (usually about 15), a person must stick to them.
As easy as this system is a person will have to do the research on the sectors they are considering and follow their trends to make effective trades. Setting buy and sell limits will help to keep the trading on track.
A good rule of thumb is to set a risk allotment. Set the percentage of the total capital that one is willing to risk on any one position, then stick with it. When the account reaches the minimum don't add more fuel, just move on. The other rule is to set the number of losing trades in a row that will be accepted, then cut back by a set percentage after that loss has been reached.
The most effective ETF trading system will be the one that works for the individual using it. When looking at different systems one must be as analytical as when they are planning on trading in a sector. Find out the consistent success of the system and how it worked in the sector that one is considering using it in. By discussing systems and strategies with a person who has knowledge of ETFs, trading strategies and systems, a person will be able to achieve successful trading within a short time. - 23212
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posted by X - Men @ 1:30 AM
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