Trading Signals and ETF Trading Strategies to Find High Return Investments
Dig Deeper to Uncover Market Drivers
Most people forget that a market index is an average of thousands of stocks with many moving upwards, lots moving downwards, and most moving nowhere fast. Start by grouping stocks in industries and sectors to see what overall trends are happening. Forget trying to pick a good stock, its too risky these days. Its much safer buying the industry or sector your stock belongs to using ETFs. This way you avoid single stock risks like bankruptcies and de-listings, but still capture all of the industry sector gains.
Develop a Trading Signal to Follow
Once you've organized a list of industry or sector investment prospects its time to start analyzing them for high return investment potential. There are several trading strategies you can consider at this juncture, but most fall into two basic camps of fundamental analysis and technical analysis. Both trading strategies have their benefits and downsides, but if you've got the time you can benefit from reviewing both fundamental and technical aspects of your trading strategy prospects.
Trend Trading Strategies
The trend is always your friend in the stock market. One of your first steps should be is to make sure you screen sectors and industries so you are only selecting those sectors in established upward trends. There are literally hundreds of technical indicators and screeners you can use to make sure a solid trend is in place for your trading candidates.
Momentum Trading Signals
If your looking for high return investments you need to screen for high momentum trades. What you should be looking for is sector and industry ETFs with a higher velocity of movement than the average market index. In essence, if the market moves upward 3% you want to be finding sectors and industries that are moving much faster on a relative comparison basis to the market, such as 10 - 12% over the same time period. There are many trading software packages available today that have the computing power to calculate these momentum and comparative analysis. Be prepared to spend a little time getting used to programming the scanning software, its best if you've read a couple books or articles on technical analysis first. Another option is to get pre-packaged ETF trading signals that analyze all major sectors of the market and provide regular updates.
Other Strategies to Consider
While you develop a trading signal that works for your needs you should also think about including other features that allow you to rank the results by certain criteria, look at short term trends, analyze longer term trends, and also think about stop loss levels when you enter a trade. Constructing your own trading strategies can be very rewarding and lucrative, but you should be prepared to spend a little time researching what specific trading strategies and signals to include.
Most people forget that a market index is an average of thousands of stocks with many moving upwards, lots moving downwards, and most moving nowhere fast. Start by grouping stocks in industries and sectors to see what overall trends are happening. Forget trying to pick a good stock, its too risky these days. Its much safer buying the industry or sector your stock belongs to using ETFs. This way you avoid single stock risks like bankruptcies and de-listings, but still capture all of the industry sector gains.
Develop a Trading Signal to Follow
Once you've organized a list of industry or sector investment prospects its time to start analyzing them for high return investment potential. There are several trading strategies you can consider at this juncture, but most fall into two basic camps of fundamental analysis and technical analysis. Both trading strategies have their benefits and downsides, but if you've got the time you can benefit from reviewing both fundamental and technical aspects of your trading strategy prospects.
Trend Trading Strategies
The trend is always your friend in the stock market. One of your first steps should be is to make sure you screen sectors and industries so you are only selecting those sectors in established upward trends. There are literally hundreds of technical indicators and screeners you can use to make sure a solid trend is in place for your trading candidates.
Momentum Trading Signals
If your looking for high return investments you need to screen for high momentum trades. What you should be looking for is sector and industry ETFs with a higher velocity of movement than the average market index. In essence, if the market moves upward 3% you want to be finding sectors and industries that are moving much faster on a relative comparison basis to the market, such as 10 - 12% over the same time period. There are many trading software packages available today that have the computing power to calculate these momentum and comparative analysis. Be prepared to spend a little time getting used to programming the scanning software, its best if you've read a couple books or articles on technical analysis first. Another option is to get pre-packaged ETF trading signals that analyze all major sectors of the market and provide regular updates.
Other Strategies to Consider
While you develop a trading signal that works for your needs you should also think about including other features that allow you to rank the results by certain criteria, look at short term trends, analyze longer term trends, and also think about stop loss levels when you enter a trade. Constructing your own trading strategies can be very rewarding and lucrative, but you should be prepared to spend a little time researching what specific trading strategies and signals to include.
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