ETF Trend Trading and Facts to Be Aware Off

Damon Jegede asked:

The common man relates the term ETF Trend Trading as an investment. As we invest our money and trade in shares, bonds and debentures through stock exchanges. Similarly ETF or Exchange traded funds comprises assets and securities and are being traded roughly at the same price as the NAV of a security is traded on a specific day. It is very much like mutual fund and a close end fund.

In the recent times the ETF trend trading made a good growth and rose up a lot. The market of ETF trading has risen about 26 times since 1996 and presently the market trades near about 800 million dollars every day. The institutional traders realized ETF trend-trading to be a modern potential market like the mutual funds and made this a success story.

The ETF also behaves in the same manner as we purchase or sell mutual funds for its NAV price at the end of each the trading day. Also as close end funds are traded more or less than the NAV price on a specific trading day an ETF trend trading is traded similarly. The price of the trend trading whether it will increase or decrease is tracked through an index like Dow Jones, S&P 500 and Sensex.

One should be aware of certain significant data before getting into ETF trend-trading. Before one starts he should know the basics of ETF trend trading, how to create an ETF portfolio and keep a track of it and how to minimize the losses and book profits out of it. The volatility of ETF is much less compared to the individual stocks and is confined within a range which makes their standard deviation lower than as equated to stocks.

Considering the factors such as low costs, less risky, presence of highly qualified and experienced professionals, more diversified than stocks all these have made ETF-trend trading a better and attractive investment option.


Financial Freedom With ETF Trading?

Thomas Leroy asked:

An ETF or Exchange-traded Fund is another form of an investment portfolio made up of many investments that trade like stocks. It holds an assortment of securities that are intended to track the performance of an index and unlike many mutual funds; it can be bought and sold rapidly working in response to market movements similar to stocks or bonds that are traded throughout the day, mainly on major stock market exchanges. The American stock exchange is where ETF’s are mainly found to be traded on.

There is no minimum investment and investors can sell short or buy on margin investing little or as much as they want. There are features and strategies that allow traders and investors to increase returns which mutual funds don’t offer, where it can no more than sell or purchase at the mutual fund’s closing price at the end of the day.? The continuity of pricing throughout the day allows a trader to take advantage and react to the market condition on a basis that is intraday.

An investor can trade ETF’s? in cash throughout the days’ regular trading hours and even after hours on ECNs which is an advantage of being immune to market timing unlike open-end mutual funds where investors have to quickly trade in and out gaining from minor price variances to profit. With a closed-end fund or ETF it is different being that by the trading on the market the underlying assets of these funds are not affected in any way.

Profits can be made by the difference in share value of the underlying assets of the Exchange Traded Funds and trading of those’s shares. When the demand is low ETF shares will trade at a discount and when it is high at a premium to net asset value.

In conclusion ETF can be a good investment when held over time.