In this article, we will talk about how ETF trading strategies can help small accounts grow quickly. When combined with the right strategy, ETFs can be one of the best and safest ways to consistently generate profits in the financial markets.
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ETFs are versatile financial products suitable for all trading styles. That means you can either start trading ETFs or start trading ETFs. Some benefits can be gained by managing the risks associated with ETF trading.
We will highlight the benefits of adding ETFs to your trading and investment portfolios. However, we will also explain the risks associated with exchange-traded funds (ETFs).
If you’re new to ETF trading and don’t fully understand how to trade ETFs, we hope this ETF step-by-step guide provides guidance.
What is ETF trading?
Exchange-traded funds (ETFs) are financial instruments designed to follow the price of a basket of specific assets and are traded on a U.S. stock exchange. ETF trading works the same as stock trading.
ETFs bring together some of the best features that mutual funds and stocks have to offer in one place. Most ETFs track a benchmark index and trade on stock exchanges like stocks. ETFs are available for all major asset classes such as stocks or stocks, bonds or bonds, commodities and cash.
For example, SPDR S & The P500 ETF (SPY) is the S & It is tracking the P500 index.
ETFs offer a cheaper alternative to exposure to a sector that is very difficult to trade.
For example, if Trader Joe wants to invest in gold, there are many alternatives. Joe can buy bullion bars or gold coins or trade gold futures contracts. However, these methods are time consuming and expensive hard way to buy gold.
The cheapest option for Joe is to buy shares in a gold ETF like GLD. It follows the market price of gold. Joe can do this for little money and with little effort. Learn more about how to trade gold.
If you believe the overall stock market will rise, you can buy a stock index like the Dow Jones. You can buy all 30 companies that make up the Dow Jones Index or you can buy a really expensive DJIA futures contract.
If you want to do this for a fraction of the price, you can buy ETF stocks that follow the Dow Jones, such as the DIA ETF.
The volatility of ETFs makes them perfect candidates for daily trading. I would like to teach you how ETF trading works in the future.
Weekly Trading ETFs
Day trading is one of the best ETF trading strategies. Because this environment is highly volatile. This means you can buy or sell ETFs at any time throughout the trading day. There are many ETF exchange-traded funds, but the best ETFs for daily trading are:
- SPDR S & P 500 (SPY)
- Gold Miners ETF (GDX)
- ProShares VIX Short-Term Futures ETF
- ProShares Ultra VIX Short-Term Futures ETF (UVXY)
- iShares MSCI Emerging Markets ETF (EEM)
They are also among the five most actively traded ETFs in the US.
ETF exchange-traded funds can present very profitable short-term opportunities. However, the odds of making money gambling on day traded ETFs are very slim. That’s why you have to play the game by some rules.
Now, before we go any further, it’s always a good idea to take a piece of paper and a pen and write down the rules on how to trade ETFs.
In this article, we’ll look at how to buy ETFs.
Step 1: Choose ETF Trading Trading Funds Suitable for Daily Trading
SPY ETF or SPDR S & The P 500 ETF is the most popular and first ETF exchange fund in the US. We like the weekly trading SPY because it ranks the largest AUM and has the largest trading volume. The SPY ETF is the world’s most popular stock index, the S & Track the performance of the P 500.
Source: Forbes
That’s reason enough for us to choose the SPY ETF as the right candidate for our weekly trading ETF strategy.
Do not assume that all exchange traded funds are not equal. If you are not sure which trade to trade, go for the most reliable ETF which is the SPY ETF.
Going forward, we will reveal what day of the week trading rules must be implemented in order to successfully trade SPY.
Step 2: Apply a 50 period moving average to the 15 minute chart
The 50-period moving average is one of the most popular indicators in stock trading. The 50 MA is a psychological level that many professional traders and investors use to gauge market sentiment.
Since many traders use the 50 moving average, it has more to do with price action. This is why we use the 50 MA with the opening trade range.
Now let’s see how we combine the 50 MA with the opening trading range.
see below
Step 3: Start trading only after 10am EST
We want to focus on the opening trading range when trading weekly ETFs. The morning session is when smart money usually steps out of the market, after which the largest volume occurs during the morning session.
By focusing only on the morning session, we avoid being glued to the charts throughout the day and only trade with institutional money.
SPDR S & Regular trading hours for the P 500 Trust begin at 9:30 AM ET. However, we like to wait for the first 30 minutes after opening to see what our smart money is up to.
Successful day trade capitalization ETFs capitalize on these opportunities during the most volatile times of the trading day.
Step 4: The price should stay above the 50-MA and open at the top of the previous 5-day trading range.
After analyzing how the market is doing in the first 30 minutes of the opening session, we check if the price is breaking above the key 50 line.
Second, SPDR S & The P 500 ETF should also open at the upper end of its previous 5-day trading range. You just need to chart the previous 5 trading days and the highest price of that trading range.
On day 6, when it opens at its highest price and stays above the 50 MA, it is a good time to buy SPY.
This brings us to the next important point to set when trading weekly ETFs.
See below:
Step 5: Hide SL at $0.25 (Below 50 Moving Average)
With this mechanical day trading strategy, we place our stop loss at $0.25 below the 50 moving average. A drop of the open SPY below the 50 MA is a sign of very weak bulls. We find this technical data very important for day trading.
Finally, we also need to define where the revenue comes from.
See below:
Step 6: Take Profit When SPY Advances $1.00
This trade setup is based on our experience that the SPY ETF has a very good chance of raising at least $1 if all of the above conditions are met. If your profit target is not reached by 4:00 PM ET, exit the trade manually.
**Note: The above is an example of a BUY transaction. Use the same rules for SELL transactions. In the picture below you can see an example of a real sale transaction.
Conclusion – ETF Exchange Traded Funds
Day traded ETFs offer simple investment opportunities and have lower operating costs than most other financial instruments. Don’t underestimate the power of trading leveraged ETFs if you’re looking to take advantage of volatility throughout the day.
In our trading strategy guide, we focus on technical analysis. We love technical analysis because it has worked for us in our years of trading, and for many other professional traders as well.
Thanks for reading!
