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Strategies for Swing Trading ETFs
Swing trading on small shares is an ideal way to get started trading exchange-traded funds, as you learn the patterns and risk management tactics that work best for your individual trading style.
Swing trading ETFs is also ideal for experienced traders who don't want to be glued to the monitor all day long as well, since you can identify trade setups and place them using buy-stop orders before each day's trading session. Tip: try trading a variety of high-volume, high volatility ETFs to see which best matches your trading personality, as all ETFs trade slightly differently based on average ranges, intraday point moves and more.
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See the "Three Line Break Exhaustion" pattern circled in the bottom left of the chart below? Knowing how to trade those using 15-minute candle patterns can potentially keep you out of false breakouts.
An entry signal was generated by the "Box Range Breakout" ETF play identified below as well, which gapped in it's favor on the subsequent trading day. There are literally dozens of patterns that can help you with your ETF swing trading (these are covered in detail in our ETF Mastery home study course for you).
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Swing Trading Exchange-Traded Funds: 3 Additional Tips
Tip #1: In making hundreds of swing trades in ETFs, I've observed that it's particularly important to determine if the broad market is in a strong (or weak) uptrend vs downtrend, or indeterminate choppy pattern, to be successful.
The reason is that since these ETFs reflect the broad market (or sector/commodity etc) moves, the best-odds ETF trades occur in strongly-trending markets. So be careful during non-trending markets, as ETF swing trades can pivot back and forth, not making headway.
Tip #2: Use a combination of candle patterns as well as the specific cup, box-range breakout and price action signals to help in making trade decisions. It's best to enter light share size when only one or two criteria are met, and enter heavier share sizes once the initial trade is in the money, and/or there are multiple confirming indicators.
Tip #3: Sometimes specific sectors (oil, gold, finance) may move much more strongly than underlying index ETFs (QQQQ/SPY), so be on the lookout for relative-strength plays where sector ETFs may move more rapidly than index ETFs, for better potential trading plays.
To determine which are stronger, compare sector ETFs to index ETFs using a 5-day chart, to identify short-term swing trading trends.
For more, see our new ETF Mastery home study course.
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