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Thursday, December 24, 2009

What To Know About ETF Trend Trading

By Patrick Deaton

Making use of ETF trend trading properly and with efficiency can go along way towards ensuring a good return on investment, not only in actual money earned but also in the time you'll invest in the actual trend trading process. As far as what exchange traded funds are, they're somewhat similar to mutual funds, though with a few key differences.

As far as some of the most effective ways to use exchange traded funds to generate an income stream, trend trading is probably one of the best. Additionally, it is far less time-consuming when it comes to doing the work to generate a satisfactory return on investment. Trading using trend following is actually fairly simple, and what you'll be doing is looking at trend lines in the marketplace.

Of course, you'll be using the exchange traded fund trading system and its rules and its rules to do so, but if you have the patience and the discipline you should be able to make upwards of a 6 to 9% return on investment every month if you trade smartly according to those long-term trend lines. Therefore, taking a few moments to learn about trend following is a good idea.

Generally speaking, there are several main ways of ETF trend trading. Those who work or utilize ETF funds and are familiar with how to trend trade will tell you that the methods fall into three categories. Fundamental trading strategies aren't those strategies that you will utilize in trend trading that follow very long market timelines.

Both costs and taxes are very efficient in this sort of strategy, and the particular portfolios you'll be investing in aren't usually traded very often and also will provide a lot of exposure to the market while also delivering a steady stream of reliable income. These are mainly mid-low to medium as far as risk of trading in the ETF goes.

Those who wish to engage in trend trading following a sector strategy are looking for a way to actively follow the market trends very closely so that they can react very quickly to changes in those trends. They have portfolios that would be invested in within the ETF are considered to be active because they are traded and monitored on a constant basis.

As a good starter strategy for getting in and out of a fund fairly rapidly, the sector strategy has a lot going for it. This strategy will allow you to get into or out of a fund with relative speed. Users also use what are called momentum-based strategies that will help you understand the optimal times for getting into and out of the fund, also.

In a blend, you can trend trade by following a 200 day moving average to find which areas in the market are moving. You can then get in and out of that market using set signals, which can give you an opportunity to be in the market for possible long-term uptrends. You will use a stop loss order to keep a cap on your losses, also. Regardless of your particular ETF trend trading strategy, make sure you take some time to study carefully before diving in. - 23212

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