A Beginners Look At ETF Trend Trading
1:22 AM
As a person who is just beginning to enter the world of ETF (Exchange-Traded Funds), you are going to hear many different types of trading discussed. ETF trend trading will probably be a term that will be a little confusing. Many people talk about this trending as though it is a separate type of trading that is not related to other types of trading. In some cases you will hear that by trend trading, you will be more successful with your trades.
If you have started trading and are doing the analytical work to spot trends and patterns, and are acting on those trends, you are already trend trading. It is not a secret strategy or way to conduct trades. A successful trader does their homework and acts on the trends that they see coming in the sector, or industry they are trading within. So, let's take a look at trends and how you can use them more effectively.
When people do a historical analysis of a sector before they begin trading, they may look at a specific block of time. Some people do an analysis on a three or five year period and note the different trending indicators in that period of time. But, what is a sector, has a significant gain or loss every seven years? If a person has not included those years in their analysis, they can miss an opportunity to make a significant gain in their portfolio.
It is very easy for a person to get caught up in the analytics of sectors when they are trying to make the most favorable trading decisions. In order to keep from being bogged down in the details and lose valuable time trading, it is a good idea to decide what type of ETF trend trading you are going to do as far as technical analysis and stick with it.
Short term trends are usually historical data for a sector covering one to three years. A technical analysis using historical data of one to three years is going to show only trends that occur in that time frame. When a person is going to use short term trends as their primary indicator, they will need to move very quickly in creating a long position when the trend rising or short when the trend is dropping and get out quickly when there is a blip on the screen. Employing only short term trending may prevent a person from seeing trends that occur within a longer time period.
Long term trends last from ten to thirty years. Within these trends are intermediate trends. When a person does ETF trend trading using long term trend technical analysis they can identify intermediate and short term trends and take advantage of the opportunities that are presented over the long term. Long term trending provides information that is more consistent for a sector.
When traders act on trends without having the background to know when to get in and when to get out, they can suffer losses. However, a person can use an intermediate trend in a sector to their advantage if they know that the same patter occurs every four years and what the buy and sell limits for that trend should be.
There are opportunities for individuals with long term ETFs to take advantages of trend trading as well. Even long term ETFs reverse course. If a person has done the analytics on a sector over a thirty year period and sees when the trend is going to reverse, they can take appropriate action before losing assets on the sector they are involved with.
If you have started trading and are doing the analytical work to spot trends and patterns, and are acting on those trends, you are already trend trading. It is not a secret strategy or way to conduct trades. A successful trader does their homework and acts on the trends that they see coming in the sector, or industry they are trading within. So, let's take a look at trends and how you can use them more effectively.
When people do a historical analysis of a sector before they begin trading, they may look at a specific block of time. Some people do an analysis on a three or five year period and note the different trending indicators in that period of time. But, what is a sector, has a significant gain or loss every seven years? If a person has not included those years in their analysis, they can miss an opportunity to make a significant gain in their portfolio.
It is very easy for a person to get caught up in the analytics of sectors when they are trying to make the most favorable trading decisions. In order to keep from being bogged down in the details and lose valuable time trading, it is a good idea to decide what type of ETF trend trading you are going to do as far as technical analysis and stick with it.
Short term trends are usually historical data for a sector covering one to three years. A technical analysis using historical data of one to three years is going to show only trends that occur in that time frame. When a person is going to use short term trends as their primary indicator, they will need to move very quickly in creating a long position when the trend rising or short when the trend is dropping and get out quickly when there is a blip on the screen. Employing only short term trending may prevent a person from seeing trends that occur within a longer time period.
Long term trends last from ten to thirty years. Within these trends are intermediate trends. When a person does ETF trend trading using long term trend technical analysis they can identify intermediate and short term trends and take advantage of the opportunities that are presented over the long term. Long term trending provides information that is more consistent for a sector.
When traders act on trends without having the background to know when to get in and when to get out, they can suffer losses. However, a person can use an intermediate trend in a sector to their advantage if they know that the same patter occurs every four years and what the buy and sell limits for that trend should be.
There are opportunities for individuals with long term ETFs to take advantages of trend trading as well. Even long term ETFs reverse course. If a person has done the analytics on a sector over a thirty year period and sees when the trend is going to reverse, they can take appropriate action before losing assets on the sector they are involved with.
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