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ETF Trend Trading – 2 Types of Analysis

ETF Trend Trading – 2 Types of Analysis

First let me share what these two types of analysis are.

Fundamentals, or as I like to call them fuzzymentals, try to predict ETF future prices by supply, demand, interest rates, government policy, weather, undering economic factors, etc. In part it does work if you are an economist and very, very good at it, but it will never generate the types of profits that technical analysis can.

Technical analysis takes advantage of the fact that ETFs move trends 30% of the time. It helps identify those trends and take advantage of moving prices.

Ultimately we do not care what (if any) the fundamental reasons are for price movement, but that it is moving and we are capturing profit from it. Identifying trends is one of the most important things to learn. My system teachers you how to do this.

My system uses only technical trading because I know, not just believe, that the price already reflects all the known fundamentals. For example when a hurricane is approaching the US Gulf coast oil prices start to go up. Because of the new fundamental knowledge of the storm the price already started moving up at the time the knowledge became available, not when the storm actually hit.

Most importantly even if somehow you magically knew all the fundamental information there was you would not know the market's reaction to that information. If you knew all the reasons why the market was going to crash in September and October 2008 you still would not know how far it was going to crash. With technical analysis my system taught a very large part of that drop in many ETFs.

If your portfolio is stagnant or dropping it is time to rethink your whole approach to the markets or at least diversify a portion to self trading.

One of the questions I get a lot is how much money does the 5-10 minute per night trading system make? The answer depends on how much money you trade. The easier way is to look at percentages.

Total non compounded monthly result are: 6.43%.

All this while risking only 1% on every first trade and having very low draw downs.These results are with using margin, but that does not increase risk because we still risk only 1% regardless of using margin or not.

Day trading my system can make you over 12% per month with the same low risk. You could make more once you became experienced study the larger list of ETFs.

If you use an IRA account I will give you a list on inverse ETFs which allow you to sell the market, but because you can not use margin in a IRA or 401k account you will need to cut the above returns in half. Plus cut the draw downs (losses) in half.

Where else can you safely average 6% per month or 3% per month in a IRA account trading only 10 minutes per night? Anyone who complains about this does not understand real trading and investing or has gotten sucked into the hype on the internet. I'll expel all that hype in a later article.

Source by Barry U Witherington-Smythe

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