October 5
Beat the Market with ETF Trading Strategies
Looking at the current scenario markets will be often touching the troubled waters for a while; in fact we can say markets will be staying under the troubled waters for a while. From my past and current experiences I would like to point out some helpful strategies, so if you are looking at some lucrative investment opportunities ETF trading is the way to go.
Sector ETF trading strategy: Some traders love trading in a specific stock, if your broker is asking you to increase your exposure to a specific sector it becomes tough to sort out which stock can give best returns in that sector. You don’t need to rely on anyone’s instincts but also you don’t want to miss out on the bus. In this situation the best strategy for a trader can be to look at Sector Specific ETF’s.
Stock ETF pair strategy is one of the favorites of hedge funds. Let’s say if you are eyeing at getting highly invested into a particular stock because you think it will give the best returns in comparison to other stocks in that sector, but you are worried about the direction of the whole sector on the next go. In this case you can buy the particular stock and short that stock’s sector ETF. Reverse is true also if you think a particular company’s stock is going to perform worse you can short that company’s stock and on the other side go long on sector ETF in which that stock belong to. Since the trader is hedging his position this can be a great investment opportunity that is if he has intimate information about some company and an industry. However this is not a “No Risk” strategy, if the company’s stock as well as the sector both moves in completely contradictory directions of what a trader thought he has to bear a loss on both the trades.
If an investor usually has huge cash sitting in his portfolio, rather than exposing his investments to money market funds a trader can invest in short-duration Bond ETFs. Return on investment in these ETFs is two to three times the returns a trader gets by investing the same funds in money-markets.
Therefore don’t let the current economic conditions discourage you because there are ETF trading strategies with which a trader can not only earn their bread and butter but if used effectively can help you beat the market and make a fortune out of it.
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