Posts Tagged ‘exchange traded funds’

Benefits of ETF Investing

Sunday, February 7th, 2010

One of the most popular tools of investing in the open market toady is through ETF investing. . The trading with the ETF is regular just as any other stock, bonds or any other investment option traded on the stock exchange.   As most of the ETF are generally index funds it keeps very good track record of the specific fund categories. For global investment ETF is the best tool and methodology as they tend to do a thorough a research. ETF investment is possible in US market for trading in bond, gold and oil market.

The unique feature of ETF is its low operational cost and diversified investment option as a product. There are positives and negatives attached to the theory of etf investing.

Positives:

ETF is better and with very minimum cost mixed product with tax rebate for the investor. ETF is a better option with good feature which can be traded in stock exchange. The ETF pricing are decided by the price of stocks traded in the market at that point of time.

ETF can be sold or purchased on margin everyday.   The mutual fund management and operational cost is much higher to mange the fund The operational cost of managing the fund is costly option  ETF as trading alternative has very less cost with very efficient for the EFT investor. The taxable benefit cannot be transferred in ETF

Negatives:

ETF’s can be traded only with a certified broker is the most negative of handling ETF

During an trade the investor has to pay lot of money as brokerage to the broker. The same principle applies to electronic trading.

The flexibility of ETF can also become a disadvantage at times. It was observed on various occasions that the customers are lured to invest and the investor loses money on investment as well as on brokerage charged by brokers.

 

 

 

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What Makes a Successful Trader?

Wednesday, November 25th, 2009

Professional Traders Common Success Factors


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Successful traders do tend to share some common traits. One such trader, nicknamed Big A, has pinpointed 5 charactristics:

1. You will find all successful traders had a mentor. That is why it is a great help if you can adopt a mentor with proven success. If you can find an honest successful trader who will teach his system, as it is and as it made him successful, then you will succeed faster than by using trial and error in your trading.

2. Successful traders know how to remain detached from market frenzy, and keep their emotions out of trading decisions. Once you have entered a trade, you need to ask yourself if you can hold position until the pre-planned exit strategy is met? As BIG A admits, it can be great fun to see your tading account soar upwards in a few days, but paying too close an attention can be dangerous. 99% of emotion can be removed with his after market trading plan.

3. Successful traders resist the temptation to make things happen. Trying to force the market is financial suicide. Being a follower rather than a leader is a key to success. Follow your system (if it’s a proven system) and don’t make things happen outside of it. If you are impulsive with clicking the mouse while trading, then make sure you do it on a demo account, and not live. Just don’t think when you get lucky a few times that it’s ok to “make things happen”. That is why you need to adopt a disciplined system and stay with it all the way.

4. Preparation is essential for every successful trade; an unprepared trade is a gamble. Not only is it vital to have a trading plan, but you must stay with it at all times, regardless of market fluctuations. You need to know how to plan each trade quickly and easily. In BIG A’s system, for example, only 5-10 minutes an evening is required for trading.

5. A successful trader usually expected to become very wealthy from trading. Close your eyes and see if you can imagine yourself wealthy? A successful trader is able to. Don’t limit yourself. Prosperity must be on the inside of you before it is on the outside. If not, your account may suffer as it reaches new heights due to a feeling you do not deserve riches. It is important for you to learn to overcome any psychological barriers to success. You can ask your mentor to help you with that.

Big A actually has his own ETF Funds trend trading course, in which he teaches his own system of day trading for exchange-traded funds.

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How To Use An ETF Trading System?

Tuesday, November 3rd, 2009

etf trading system

ETFs or Exchange Traded Funds can be bought and sold anywhere you would normally by stock. Any broker can trade them. An ETF trading system is a group of principals that guide you in buying ETFs without involving emotion. You must follow the rules for the system to work. If you follow your emotions, you will lose.

Many systems pose a risk that is between a mid-low and a a medium risk. Many are easy to use.

The one key thought of an ETF trading system is never stray from the rules. That souds easy enough, but wait till a buddy brings a tip or the market becomes unstable. Then the emotions can get pretty strong.

Even in an unstable market, you can consistently out perform the buy and hold people. You can count on a steady annual return.

Go back a few years to 1928. The market was hot and everything that was invested seemed to turn to gold. The emotional response was nothing can go wrong. Then that fateful day in 1929 came about, and many followed their emotions to financial doom. Emotions are no way to make wise investments.

Investors that left their emotions at home, may have experienced short term losses, but continued to see an annual return on their investments. By following the rules, investors continued to see a fourteen percent annual return from the peak of 1929 for the next twenty years. The buy and hold people did not see the market reach its 1929 high again for many years.

It could take the market another fifty to eighty years to recover to its highs of a few years ago. Unfortunately, most of us cannot wait that long. We need something that will give us that same consistent annual return. ETF trading system can do just that. They will help you to avoid the pitfalls of sharp market downturns. They help you to make money year after year.

Stop following the heard. You probably learned that lesson a couple of years ago when you were trampled. Followers always get trampled in the stock market, it is only the leaders that win. They know to sell before the everyone else and to buy before everyone else. That is why they win.

Become a leader that wins by using an ETF trading system. Stop following your emotions and find the principles that work to bring you a consistent annual return on your money.

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