ETF Trading Tactics – 3 Systems to Zero In On Beneficial ETF Trades
This tactic takes its roots in the physics lab as well as basic concept of inertia. The moment an object is in activity in tends to continue on its path plus directory until the idea meets with resistance. That same concept given to ETF trading is the foundation for Exchange traded fund momentum trading. Your twist on this system that makes it easier to abide by and implement would be the ranking process plus the longer time horizon for analysis.
In a nutshell, study the universe associated with ETFs you wish to trade, evaluate the momentum positioning of each ETF, in addition to rank the list in descending order. Those people ETFs ranked at the top of their list are your leading Exchange traded fund trades and are showing the strongest momentum. Get these ETFs until its position in the search rankings falls. Re-rank your ETFs routinely (weekly, monthly, or quarterly), and alter your holdings accordingly. We have now found that monthly re-ranking cycles work the best ideal balance between long term performance and minimal trading activity.
System # 2 – RELATIVE STRENGTH COMPARATIVE Positioning
Building on the initially strategy, this ETF Trading strategy at this moment tries to focus simply on ETF trades that are actually outperforming the benchmark equity index. The main element to this strategy is making use of multiple timeframes in the investigation, and at each time schedule used, compare this strength of the ETF to the equity list, and take a rating of this relative strength. Then repeat this course of action for many different period frames. Once you have this specific basic analysis, use a computer program or spreadsheet to average some time series measurements connected with relative strength, and after that sort them within descending order.
What you end up with is a list of the top ETF trades that have the highest position levels of outperformance when compared to the standard equity index. Buy the top section of the collection, monitor it as time passes, re-rank as set time intervals and upgrade in new leadership positions. Its that simple. If you follow this strategy your portfolio will always keep invested in the top executing ETFs of the stock market and will sell fading ETFs since they drop in the position list.
STRATEGY 3 – EXTREME TACTICAL ASSET ALLOCATION
Just like the first strategy, that one adds in the element of asset allocation. The first goal is to establish your overall asset percentage thresholds for each of the 3 major asset areas (equities / preset income / alternative asset classes), and after that to apply strategy #1 one at a time for each asset category. You will end up with A few different ranking lists each time.
What you may have accomplished now is homing into each property category to identify the very best ETF trades that are ranked in descending order of energy strength. Each month or even quarter you can re-rank ones potential ETF buying and selling universe of individuals, and rebalance your account as needed. Use this Exchange traded fund trading system to always maintain the portfolio within your pre-defined investment allocation levels extra time.
S.A. Johnson is the editor on the Sector Timing Review ETF trading strategies investment newsletter plus follows the market employing popular ETF dealing strategies that are released every month is an user-friendly document designed for regular individuals.
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