ETF Trading - How To Get Started

For those who are experienced ETF traders, you'll relate to the challenges involved in trading the narrow average trading ranges that some of the ETFs move inside.

The key to successfully trading these is to understand the nuances of more adaptive, flexible position scaling, using both pivots vs breakouts to help identify the best-potential trading setups available in trading ETFs.

Advanced ETF Trading Tactics — What They Don't Tell You



		There are several important methods that experienced traders use to trade ETFs that you should be aware of. One is to look at the size of both pullbacks and breakouts to see "how far it's moved in the prior day's trading action, before pivoting". This gives you valuable insights into the likeliest pivot and breakout triggers for the current day's trading. Another important technique is to trail close stops on half your position (or other increment) once it's in the money, to lock in a gain. This is particularly useful once the ETF you're trading has moved to the edge of it's daily trading range. There are many other ETF trading techniques we cover in our advanced educational resources.



		One challenge for ETF day trading is that most ETFs have frequent pullbacks and can be choppy to trade. For swing traders, this is less of an issue. When day trading ETFs, one actual technique I use is to start by using a looser stop at the edge of the 2-day high or low (meaning the current days' range and one past prior day's range). Then I'll tighten it in, as I scale into size into the trade. One other strategy worth testing is to scale down on repeated trades, for example if you get stopped out two or more times in a row, make subsequent entries done in the same trading day ever-lighter share size, to reduce risk.



		Entering during pivots: if the exchange-traded fund is inside the prior day's high-low range, I will enter on very small share size. If it has traveled outside of the prior day's range, I will gradually build a new position with increasing share size. During breakout trades, typical day and swing trading ETF strategies are used, namely looking for a) bullish "cup" and triangle patterns, b) bullish engulfing candle patterns, and c) early 2-day high breakout moves. For pullbacks in uptrends, one common strategy is to scale into winning positions by adding small increments (in 20-50 share size) as it moves through each .10-.18 worth of price action during the breakout. Stops are trailed at just over breakeven once in a winning position. For the initial trade, using a 2-day low is the hard stop-out level.



		Watch as our trader explains how to use advanced trading strategies for day and swing trading ETFs in this presentation. Cost: FREE

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