The development of Exchange Traded Funds (ETFs) has radically changed the investment landscape.?? Now investors and traders have an investment vehicle with the flexibility to enter or exit like an individual stock but the with the diversification possibilities of a mutual fund.
Over 100 million American households are invested in the stock market with IRAs 401K?s, or non-retirement account mutual funds.? People have become familiar with stock indexes and sectors that those vehicles were designed to target for growth.? As an extension, the ETF revolution with limitless market possibilities has enabled investors to transition and take advantage of some significant benefits.
Exchange Traded Funds can track a familiar stock index like the Dow (DIAmonds), S&P 500(SPYders), or Nasdaq (QQQ), and have the Flexibility to trade like a stock for long or short term investing.
Fortunately for us, the Quiet Money Indicator, or OVI works extremely well with ETFs.
The OVI is often a LEADING indicator.? This puts it at a huge advantage compared with lagging indicators such as MACD, Stochastics, moving averages and RSI which are all averages of several days of data.
The problem with lagging indicators is that they typically don?t react until after the market has made its move.? In other words, they are too slow, whereas the OVI is immediate.
So, used correctly together with specific chart patterns, the OVI demonstrates that the options markets can often be ahead of the stock market.
ETF performance tracks the widely followed market segments but, importantly, without the high management fees of mutual funds.
They can be traded and priced just like a stock with each share representing a percentage of the index or vehicle.? The diversification and diversified stock risk are also attributes that are especially important in times of extreme market volatility.
For active traders there is no need to wait until the end of the day as in mutual funds to exit or redeem shares.? It is also an ETF advantage to invest anytime the marketplace is open from 9:30 to 4pm Eastern Standard Time.? The ability to eliminate the end-of-day settlement for investment adjustments is a significant advancement for individuals and levels the playing field for all investors.
In addition, Exchange Traded Funds exist for numerous market sectors and investment niches.? Almost any possible financial segment is represented from Biotechnology to Zinc.
The individual ETF components are designed track that industry, financial instrument, segment, or natural resource. This revolution in Diversification has given all investors access to opportunities like the Chinese stock market to emerging technologies with high volume liquid instruments.
As many of you know, the stock market is broken down into ten major sectors within the S&P 500.
Money flows into and out of these sectors as the investment conditions and fundamentals change.? A classic axiom of trading, that money isn?t made or lost?it just moves, has been followed by professionals for decades with rolling into ?hot? sectors for better returns.
An ETF gives anyone that same opportunity to identify and invest in the specific areas of growth.
Another major advantage is the ability to trade in any market direction.? There will be periods of time that investment classes fall in value instead of rise.? Shorting takes advantage of that price movement to participate in an important reality of any financial marketplace, downward movement.
Exchange Traded Funds offer the ability to trade in any market direction and time frame based upon your individual investment plan.
As you can see, Exchange Traded Funds offer many advantages for investors with a world of possibilities.? The Diversification, Flexibility and No management costs make ETF?s a natural part of any investment portfolio.?? Any financial interest or market segment can be targeted to give better returns for your personal investment plan.
But just as importantly, we use the Quiet Money Indicator, or OVI, with a break out pattern to let the market tell us where it?s going.? Whether it?s with ETFs or individual stocks, we just tag along for the ride and some fat, juicy profits.
Remember, Plan your Trade and Trade your Plan!
Guy Cohen
About the author
A true innovator, Guy Cohen is the creator and originator of Flag-Trader, The OVI Index, and OptionEasy. He is also the author of the best-selling trading books "Options Made Easy"...Read Full Bio ?
Other posts by Guy Cohen
Source: http://www.absolutewealth.com/exchange-traded-funds-supercharge-your-portfolio/
my fair lady conversion disorder the chronicle spinal stenosis the forgotten man mike jones just friends
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.