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Tuesday, December 1, 2009

Overview Of One Of The Best ETF Trading Strategies

By Patrick Deaton

Most ETF traders have their favorite ETF trading strategies. Some traders have used the same methods and strategies since they started trading. Others found the most effective strategy after trying some methods and developing a strategy that was effective for them. ETF trading strategies are designed as a whole to meet the individual needs of individuals. Some of the strategies are created for people who will be working with their trades on a regular basis. Others are made for people who will mix their ETFs with other stocks in a portfolio.

The most popular of the ETF trading strategies currently used is the buy and sell points strategy. This strategy requires the most consistent and diligent effort on the part of the trader at the front-end of their trade, but once the buy and sell points have been established, they do not need to respond to the ETF until it reaches one of those points.

Investing time and effort in finding the realistic and accurate buy and sell will require the trader to use many tools. Some of these tools include analytical graphs and charts that help to compile historical data. There are many websites that offer different types of calculators that provide assistance in developing the types of trend data that is needed.

The data collected will reveal trends and patterns from a historic perspective. A trader will be able to calculate when the highs and lows occurred for that sector or company, what their historic price for stock was, trading volume and other data that will help the trader to spot important trends that occur on a regular basis.

This strategy relies heavily on technical indicators for reliable information regarding trends and patterns. It is important that the trader compile as much historical data as possible about the sector. In doing this the trader will be able to more accurately calculate when a blip will occur on that sector's market. This is especially useful if a sector experiences an extreme low every year at the same time. By selling during the high and buying during the low, an individual can general more revenue than they would if they had ridden out the low.

The charts, graphs and data that are collected will give the trader a look at the sector or company's performance over the period of time that the data covers. By compiling the data and including variable factors that may have randomly affected the sector's market, a trader has the opportunity to make a decision based on a solid foundation of information. When using the buy and sell points ETF strategy a trader does not take into consideration fundamental information about the sector or company that is not reflected in their numbers.

This strategy and the decisions that are made based on the data are technical and there is no personal or fundamental information about the sector or company taken into account when making one's calculations. Many investors who are new to trading find that this can be very difficult if they have a personal interest in a sector or company.

When deciding the most effective ETF trading strategies, a person will want to research the strategies and methods that are being used and find the one that most effectively meets their needs. The strategies can be individualized to meet specific needs, but a person must have knowledge and skills to work with any trading strategy that they employ. - 23212

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