Investing In An Etf – Why Timing Is all things
Investing In An Etf – Why Timing Is all things
Etfs, short for transfer traded funds, are widely popular with both fund managers and personel traders. This is largely due to the fact that they can be bought and sold at any time, just like customary stocks. However if you want to make consistent profits trading these instruments, then you have to get your timing right.
They say that timing is all when investing in the stock market, and the same applies to transfer traded funds. These instruments tend to track a determined index or market. So this could include major indices such as the Ftse 100 and Dow Jones, major currency pairs such as the Gbp/Usd and Eur/Usd pairs or commodities such as corn, crude oil, copper, gold, natural gas and wheat. The truth is that you can find an Etf for pretty much anyone nowadays.
Anyway the point is that anyone you are concerned in investing in, you have to buy at the most opportune moment. Therefore one option you have is to trade breakouts because a lot of the most popular markets are watched avidly by escape traders, so any resulting price move can become self-fulfilling to a determined degree.
So for example if the price of crude oil happens to trade between and 0 for months on end before ultimately breaking through the 0 barrier, then it might be worth buying the crude oil Etf. If the price continues heading higher to nearby the 0 mark, then you should make nearby 20% profit from your Etf investment.
An alternative arrival is to wait for a shop to be massively undervalued. For instance if the S&P 500 drops sharply over a period of several months and the Rsi and stochastic indicators are now both below 20 and there is a clear Macd difference pattern forming, then it may be worth drip feeding some money into an S&P 500 Etf for the long term.
To give you a few examples of how much money you can potentially make from transfer traded funds, let’s look back at 2008 and 2009. During this time you could have bought Etfs in the Ftse 100 when the price was nearby 3500 (now 6000+) and the Dow Jones when the price was nearby 6500 (now 12300+). Similarly you could have bought a crude oil Etf when the price per barrel was nearby (now ).
So the point I want to make is that Etfs provide you with plentifulness of opportunities to spend in a variety of separate instruments whether it’s indices, currencies or commodities, for instance. However you still need to get your timing precisely right otherwise you will struggle to make any money in the long run.
