Beginners Introduction To ETF Trading System
When choosing an ETF trading system that will be effective a person will want to factor in their own eccentricities. Some people enjoy doing analytical work and following trends. Other people want to have a software program or web service that will do the leg work for them and give them the best bet on an ETF trade. The systems that are available run a wide gamut. ETF trading systems have hundreds of systems that work for some people and don't work for others.
The system that will work for a new trader will depend on the type of trading that is going to be done, the sectors that will be traded, and the style of trading that a person enjoys. A different system will work more effectively with high risk Leveraged ETFs than with long term ETFs. So, if a trader is going to diversity among several sectors they may need to have different systems in place that will work with each sector.
When selecting a system, it is important to remember that there is no magic trading system out there that will be effective all the time. When people start using a system that they have been told is the magic bullet they are disappointed and frustrated very quickly. The ETF is made up of millions of small moving parts that each affect the trades taking place. A system that may work for one person might not be as effective for another. Finding the system that works for you will be developed over a period of time as strategies and systems are tried and discarded or altered.
For a beginner, a minimal risk system that has been around a long time is the Exponential Moving Average system. The EMA involves following trends. It is used most commonly on the TLT, XLF, RTH, SMH, and a few other sectors. It has a decent risk rating with a high of about medium risk.
The system involves going long when the fast EMA crosses above the slow EMA and short when the reverse happens. The trader must always leave or reverse positions the day after the fast EMA and slow EMA cross. And, when the rules have been set up, the new trader needs to stick to them.
Even this simple system will require that a person do the necessary research on each sector and follow their trends to make effective trades. It is important to set buy and sell limits so that one does get caught up in trading and lose more than they intended.
Setting up a risk allotment will also be important. Setting a percentage of the total capital one is going to risk on a position then moving when the threshold is reached will be beneficial. Adding to an account once it has crossed the threshold is not advantageous to gains. Setting the number of losing trades that one will have in a row and the percentage that will be cut back after that threshold is crossed will also avoid slipping into losses.
When deciding on the system or method that will be most effective it is important to get as much information about the system as possible before implementing it. When a system is offered that has no history of consistent success it may not be the best system to start with. Talking to a person who has expertise in each ETF trading system will help a person to find the system that will be most effective for their needs and requirements. - 23196
The system that will work for a new trader will depend on the type of trading that is going to be done, the sectors that will be traded, and the style of trading that a person enjoys. A different system will work more effectively with high risk Leveraged ETFs than with long term ETFs. So, if a trader is going to diversity among several sectors they may need to have different systems in place that will work with each sector.
When selecting a system, it is important to remember that there is no magic trading system out there that will be effective all the time. When people start using a system that they have been told is the magic bullet they are disappointed and frustrated very quickly. The ETF is made up of millions of small moving parts that each affect the trades taking place. A system that may work for one person might not be as effective for another. Finding the system that works for you will be developed over a period of time as strategies and systems are tried and discarded or altered.
For a beginner, a minimal risk system that has been around a long time is the Exponential Moving Average system. The EMA involves following trends. It is used most commonly on the TLT, XLF, RTH, SMH, and a few other sectors. It has a decent risk rating with a high of about medium risk.
The system involves going long when the fast EMA crosses above the slow EMA and short when the reverse happens. The trader must always leave or reverse positions the day after the fast EMA and slow EMA cross. And, when the rules have been set up, the new trader needs to stick to them.
Even this simple system will require that a person do the necessary research on each sector and follow their trends to make effective trades. It is important to set buy and sell limits so that one does get caught up in trading and lose more than they intended.
Setting up a risk allotment will also be important. Setting a percentage of the total capital one is going to risk on a position then moving when the threshold is reached will be beneficial. Adding to an account once it has crossed the threshold is not advantageous to gains. Setting the number of losing trades that one will have in a row and the percentage that will be cut back after that threshold is crossed will also avoid slipping into losses.
When deciding on the system or method that will be most effective it is important to get as much information about the system as possible before implementing it. When a system is offered that has no history of consistent success it may not be the best system to start with. Talking to a person who has expertise in each ETF trading system will help a person to find the system that will be most effective for their needs and requirements. - 23196
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