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.