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Monday, January 4, 2010

Tips For Beginners: ETF Trend Trading

By Patrick Deaton

There are many programs and services available on the Internet that offer services when a person wants to participate in ETF Trend Trading. When choosing a service or program an individual will want to take some time to consider what their needs are and how the service or program can help in making successful trades.

When doing an accurate technical analysis a person will need an analytical tool. There are many available that will give the detailed information that will help to identify trends and patterns in a sector. The programs usually are broken into short term, intermediate, and long term trends within a sector. Some of the programs offer other charts and graphs that provide information on the trends that are occurring within trends.

When a person uses one of these tools, it is important to remember that without other indicators, the information shown on the trend may not be providing all of the information that one will need to make successful trades. A trend may show a significant drop, for instance, if there is a major executive level change in a major business within a sector during a short term trend. When this occurs the trend may show a downward flow for up to two years.

When a significant event occurs in a major company within a sector, it may disrupt a trend. It is important to have the historical data that shows when anomalies in trending occur and see if a pattern exists for those disruptions. In some cases these anomalies occur at a regular interval for the sector and can create an advantage to the trader.

EFT trend trading is simply using analysis effectively. When the momentum of a sector changes a trader will get in, going long in the trend is upward. When the trend reverses, they get out. When the momentum is downward a person takes a short position. The key to making gains in this trading is to know when to get in and when to get out. For many people the time to make a move is done on a feeling that the trend is reversing.

When an individual is more hands-on and likes to analyze and study the indicators in their trading sectors, they will develop the skills to expand trending beyond the points shown on graphs and charts. Some people get so bogged down by the analytics that they miss opportunities to take proactive positions on some trades. Balancing the amount of analysis and indicators that are relied on when trend trading can help a person to have more effective trades.

When first beginning, it is a good idea to set buy and sell limits so that an opportunity does not slip past. When trend lines indicate a reverse in a trend, a person needs to act on that indicator if they feel that the trend is getting ready to reverse.

Learning about systems, strategies, methods, and types of trading, including ETF trend trading will give a person a broad pool of information to pull from when there is an opportunity presented in ETF trading. By knowing about the different aspects of ETF trading a person is more prepared to system systems, trading strategies, or sectors when needed. - 23159

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