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Jovan

What ETF trading strategies can I place?

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Hello, I would like to know the best strategies to use when trading ETF. Strategy is very important for successful trading. Advise me on this, please.

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Hello Jovan,
As an upcoming investor with ETF, you are less aware of what to do with this platform to get profit. Exchange-traded funds, with significant benefits such as portfolio diversification, is a perfect investment option.
For you to select a good ETF strategy, then you need to know your needs, strengths, and weaknesses, and from there, choose a method that will suit you best.
One of these techniques is by selecting the best platform for you. You know your needs; you know your weaknesses and strengths. If you are not an expert in this niche, say a beginner, then go for the one which is easy to use and understand.
You need to know what you want. The rule of the thumb in any undertaking lets say businesswise or in academics is to set goals. Know the areas where you are going to take risks from and what you want to achieve from that. 
Since you can depend on dividends by buying the correct stocks, then why not go for them. Rewards will provide you with a steady income, and its prices hardly fluctuate, unlike stocks. This is a good technique, especially for new traders.
For your strategies to work out well then, first weigh yourself down and know what you want from ETFs. Good luck!

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Hi Jovan,

When choosing a strategy, you need to get the one that is in line with your expense ratios, market liquidity, and investment choice. First, you should know your risk tolerance. Do not go for a strategy that is going to stress you out in terms of risk management. The platform you are using should sync with your plan when it comes to ease of use and navigation. You can take up a platform without the required feature when using the strategy of your choice. Do not forget to consider your goal. Are you looking for fast returns within short time frames, or are you looking to hedge your portfolio's risk. Take all of these factors when choosing a strategy. Let us look into the best strategie you can use when trading ETFs.

Swing trading

As a trader, you hold short term positions for short periods. The main objective is to enter and exit a trade as fast as possible, making small profits frequently. This has the advantage of no overnight risk. It also disregards risks brought about by holding deals for long periods. It is ideal for a trader with a mindset of small profits throughout the day. It will, however, require you to be vigilant when trading. The features that ETFs hold make swing trading one of the best strategies to deploy.

Using Inverse ETFs

You will need to use a lot of technical analysis for this strategy to work. When the price is expected to fall, you will sell what you have and repurchase it when it hits rock bottom. You will be buying it in hopes of the price peaking again. This strategy may not work all the time, but it is an excellent tool for advanced traders who are familiar with the risks and how to effectively mange them. It also requires proper charting tools to determine the safest point of entry and exit.

Offset risks with ETFs

If you fear that your investments are exposed to risks, using ETFs may beefit you by hedging. You can hold short term ETFs, and thee returns gained will offset the losses incurred in case the risk takes action. This strategy is suitable for beginners who have acquired a portfolio through inheritance.

Attain a steady flow of income with Dividends

Dividend ETFs will see to it that you get a steady flow of income from the returns gained. Beginners can use it as a tool to grow their capital since you have the option of reinvesting your profits. Once you reinvest, you will be multiplying your gains.

Short selling

At this juncture, you will be selling loaned out securities or financial instruments. This is a risky method to trade ETFs, so beginners are discouraged from adopting it. A trader who wants to create short term positions in new markets and is familiar with the risks involved and how to manage them can use iShares EEM ETF.

Gambling with Seasonal Trends

As the description suggests, you do not have an assurity that the strategy can work. You will be betting on popular seasons. A good example is when Gold prices skyrocket because of the well known India ceremony "Diwali." The best time to purchase Gold Etf is mid-October and close up mid-November. Gold prices in India at this time usually go high, and traders can make a lot of gains.

Now that you know some of the best strategies you can use, you can go ahead and choose the one that best suits you.  Very many ways of investing  ETFs are coming up; one of the underated is the Portfolio Prophet. It has helped numerous traders get more profits from their investments. Read more about it here.

 

 

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Hi Jovan,

Thanks for asking,

ETFs are winning investors’ hearts thanks to their diversification opportunities. But owning the asset doesn’t guarantee returns. You also need the right trading methods. As a beginner, you can test the waters with bond ETFs. Although their prices also shift, bonds undergo smaller movements than stocks. 
Dividend ETFs also boast of steady values. On top of that, they’re a source of passive income. Aside from returns, check the expense ratio before picking a dividend ETF. Another option is choosing causes you’re passionate about to stay engaged. For instance, ESG ETFs are perfect for nature enthusiasts.
You can advance to riskier strategies when you gain experience. Take the case of volatility ETFs. While you may not know the direction the prices take, you’re sure the swing will be massive.
Leveraged ETFs also bear a similar risk. Comprising of stocks, options, and futures, these ETFs multiply on a primary index’s performance. Since downturns are also multiplied, timing your purchases is necessary so you don’t lose your capital.
 

Edited by Leah

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