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The good news is that exchange-traded funds (ETFs) trade exactly like stocks.
Starting off by trading a handful of ETFs with small position sizes is a great way to get started, once you've learned how to trade the most consistent ETF patterns.
Let's start off by looking at how to really trade ETFs:
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Visual Quickstart Guide: How To Trade Exchange-Traded Funds (ETFs)
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With literally hundreds of ETFs to choose from, it may be overwhelming to new ETF traders to figure out which ones to trade.
As with stock scanning, it's important that the ETFs you choose have both sufficient Volume and Volatility to be worth trading. Low-volume choppy ETFs are not as good for active traders as are more liquid, highly volatile ones (see the video below for examples).
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After you choose a handful of ETFs to learn about, and possibly trade, the first key step is to identify the average trading range (intraday and multi-day) for the ones you're interested in trading.
Why is this important? Because a key advantage to trading ETFs is that you can know ahead of time what the likely high/low range for each ETF will be for each market day, based on an average of several prior day's trading ranges.
This simple (yet powerful) technique gives you an enormous edge in identifying both pivot and breakout triggers, once you've been trained in spotting these key entry and exit signals.
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Discovering how to pinpoint the correct price points to enter your ETF trades is critical to success (as is setting trailing stops to lock in profits).
One significant consideration to account for is whether you are a day trader or a "swing trader" in these volatile instruments. The entry and exit criteria for each type of trade varies a lot based on the timeframe you are trading in.
For example, an ETF day trader will place more emphasis on realtime market signals (like TRIN/VIX/2-Day high breakout areas) for their entries, while an ETF swing trader (holding 2 to 20 days) will focus on more traditional multi-day support and resistance levels for generating trade entry signals.
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The use of "position sizing" is an essential part of successful ETF trading. This means that all trades are initiated on relatively small share size, and only added to once they're in a profitable breakout continuation for you.
The mechanics of position sizing, also known as scaling in or out of trades, is a well-accepted professional trading strategy, and one that can be mastered with practice (for more on position sizing, see the works of Van K. Tharp). As an active ETF trader, you need to learn by seeing examples of how this technique works in actual trades. |
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Watch as our trader explains the basics of how to get started with trading ETFs in this useful
step by step free video tutorial. Cost: FREE |
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What did you think of this new ETF trading video?
Please fill in a quick comment below; I'll post it below for other traders to see, using your first name/last initial as seen in the actual ones sent in below so far. Tell me what you think!
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Trader comments (I'll post your comments here below - thanks everyone): 
July 15, 9:25AM
"Ken, this was a great overview on ETF trading. I always pick up something new with one of your videos." -Richard L.
June 14, 11:03AM
"I want to thank you . everytime i see one of your lessons I learn so much. you never seem to run out of things that help us traders. I have heard about ranges for year but never understood them till now. I'm am so glad Steve turn me on to you. Thanks Ken." -Sal S.
June 14, 1:01PM
"excellent presentation. offered the basics of ETF trading using easy to understand technical tools" - Herb A.
June 14, 12:57PM
"Thanks for the great teaching lesson. Reinforcement of the 10% Right Edge guideline war very clear. I am still exploring the usage of etf w/options as well." - Dennis D.
June 14, 12:21PM
"Good video! I would like to see you do a trading DVD system
on ETF's. Your rule for range 10% was good, your box ranges was also very good. Because your a hands on guy its comes out in your teaching. Thanks again." - Perry S.
June 14, 12:36PM
"Thanks Ken, There is always something new and helpful." - Charles D.
June 14, 1:17PM
"Your trading approach makes it very enlightening and inspiring to new comers to get involved in ETF trading. I would like to see more new techniques." - Jay M.
June 14, 1:18PM
"You did an excellent job of presenting many different points in a very short period of time." - George T.
June 14, 1:56PM
"I really like this 'How To Get Started' video, especially with its some of advantages over stock trading. As for me who want learn about ETF trading, this is good beginning on how get it started." - Umaru
June 14, 3:23PM
"Have been using your entry and exit strategies on stocks for a few years. I now feel more comfortable in trading and want to apply your trading methodologies into the ETF arena for better leveraged positions." - Larry D.
June 14, 3:45PM
"Very nicely done presentation with lots of content and very little fluff. The video should be of interest to both beginner traders, and more experienced traders of other financial instruments desiring to transition to ETFs." - James B.
"Thanks, learnt some new things to look at." - Brian T.
"Thanks Ken great stuff." - Eddie F.
June 14, 9:10PM
"Nice informative video!" - Millowena
June 14, 9:44PM
"Thank you" - Walter
June 14, 9:58PM
"Great little video. You've packed a lot of good trading advice in a short period of time." - Sammy M.
June 15, 12:36AM
"Certainly enjoyed this. I really liked the range information, that is valuable. Thank you for sharing this with me and all others, very kind of you." - Steve A.
June 15, 1:58PM
"Thanks for another very clear and concise presentation. I have purchased numerous training materials over the past ten years, and yours and Steve Nison's are by far the very best!" - Bob T.
June 15, 3:15PM
"Great video... Nice to see you active again. Good times are coming." - Ernie S.
June 15, 6:33PM
"I cant wait for the home study course to come out.
Ken keeps it simple to understand without any filler
materials. Great work, keep it up." - David J.
June 15, 9:41PM
"Hopefully through you free training I will be able to make enough money to actually afford some of your training." - David J.
June 15, 11:58PM
"Finally got a chance to look at this video and I have to say you are really getting to be one of my most admired traders/educators. I already feel that you are one of the best trader's in the world (really) and now I believe you are one of the best educators. I hope that you know how good you are...I was impressed. Thanks and congratulations... p.s. most helpful for me was the information about how and why holding ETFs overnight was not as risky as I had imagined ;-)." - Laura F.
Keep those comments coming in, traders! And thanks very much for your kind words.
It means a lot to me. Running these educational sites by myself is like working in a vacuum, so that's why I do surveys a lot and ask for your comments, to find out from you if what I'm producing is helpful. Your comments are very much appreciated.
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To get new trading videos as they're released, be sure to enter your email
address
in the newsletter box on the main page — best wishes for ETF success!
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Disclaimer: Site visitors are advised that active trading is a high-risk, speculative activity and that generally expected customer results are that all traders will incur trading losses, regardless of the training they may receive and will not become profitable. No profitability nor performance claims of any kind are being made. We are not an investment advisor, financial planner or registered broker. We provide educational services for active traders. You accept all liability resulting from your trading decisions. No offers to buy nor sell any security are being made on this site. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site and no overall nor specific performance nor profitability claims of any kind are being made, nor should be inferred. Traders agree to not make actual trades based on the information contained herein, since all content is published for educational use only, and is not to be construed as trading recommendations nor advice. No individual advice nor trading management services of any kind are provided, therefore no member nor subscriber should assume that their participation in the services provided herein serves, nor is suitable as, a substitute for ongoing individual personalized investment advice from an investment professional chosen by the member/subscriber. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown.
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