How To Trade An Exchange Traded Fund

Transcription

1 How To Trade Market Sector ETFs, and Beat The Market by 17x!

2 If you watched the first video, then you know In many ways, ETFs are more powerful than. Stocks Futures And even options! The most obvious reasons this is true are because

3 ETFs make trading easier and more profitable because you can Trade them just like stocks Avoid missing big moves in the market because you re stuck in the wrong stock Avoid getting caught in bad news gap down moves in individual stocks Use reverse ETFs to profit in falling markets in any type of account

4 But ETFs can give you an even BIGGER EDGE than Trading flexibility Simple diversification Cost savings Etc

5 ETFs have changed the investing and trading STRATEGY landscape IN YOUR FAVOR!

6 In fact, strategically trading ETFs is so effective that now institutions are using them!

7 Returns of over 600% since 2007 You now have access to trading strategies that large institutions have had exclusive access to for decades!

8 For example, in the last video you learned When you know how to trade sector trends You ll discover massive profit potential in Sector ETFs because the best Sectors dramatically outperform the market. SOXL Semiconductors SPY (the market) GDX Gold Miners ETF

9 Don t get dragged down by the worst The average out performance over a year between the best and worst sector is 50 percentage points This means if you buy the SPY you ll participate in the best BUT you ll ALSO get dragged down by the WORST! SOXL Semiconductors SPY (the market) GDX Gold Miners ETF

10 In this video you will learn A simple ETF strategy that has generated over 600% returns The exact 20 ETFs we use to catch every market move, so you don t need to scan thousands of ETFs A unique method to identify the best ETF to buy right now The simple cycle of money that helps you anticipate every major market move

11 What you re about to learn This may be the first time you ve heard about this trading methodology, but it s been used in the institutional trading world for decades.

12 However the individual investor, like you, has been locked out of this opportunity to earn extraordinary returns simply because it s been impossible for you to execute until NOW with the advent of ETFs, and

13 Someone needed to figure out how to do it with ETFs.

14 You re about to discover HOW we did it!

15 This isn t the first time MarketGauge s partners have leveraged disruptive technology to make trading easier and more profitable. We ve been doing it for decades

16 My partner, MarketGauge Co-founder, Keith Schneider was a floor trader and owned seats on all the commodity exchanges in New York.

17 And he made millions trading gold in its historic bull market using hand drawn point and figure charts that looked like this

18 Then in the 80 s, as computers evolved he built a company, MarketVision, that pioneered market analytics on Wall St. Revolutionized charting capabilities for the professional trader!

19 Viewports before Windows Nice mouse!

20 The rise of the quants (1990 s) More powerful computers and sophisticated software enabled the use of artificial intelligence, neural networks to improve trading strategies! 100 s of potential trade setups The highest probability trades!

21 1997 MarketGauge.com is formed Supplied trading analysis to institutions like Reuters Bank of America Fidelity Bridge Barron s Townsend Analytics ILX Systems ADP Thousands of individual active traders

22 Early 2000 s Completely automated trading execution based on sophisticated rules.

23 Now We re enabling individual traders to profit from sector rotation in the market just like institutions have for years. Sector Momentum Yields Massive Returns

24 But HOW? ETFs provide ability to use small amounts of capital to trade well diversified assets very easily. For example, buy SMH = position that profits from the trend in 25 semiconductor stocks! This enables sophisticated sector based relative strength models to become available to the average investor (who know how to execute it).

25 What is relative strength investing? Don t take my word for it James O Shaughnessy, What Works on Wall Street Manages 6.5 Billion in Assets Over six-month and twelve-month periods, winners generally continue to win and losers generally continue to lose pg 443 Price momentum prove(s) to be an especially good way to identify both those stocks which go on to perform well and which go on to perform poorly. pg 579

26 Why does it work so well? Relative strength based strategies work best when applied to conditions that have persistent trends. Persistent trend are created and driven by The Liquidity Cycle

27 The Liquidity Cycle Economic Recovery Bond Prices Fall Property Prices Rise Inflation Rises Rising Liquidity Stock Prices Rise Short-term Rates Rise Falling Liquidity Short-term Rates Fall Stock Prices Fall Inflation Falls Property Prices Fall Bond Prices Rise Recession

28 Sector Rotation

29 Liquidity = money = demand; which chases supply Economics 101: Supply and demand for goods and services drives all economic activity and markets adjust accordingly. Economic and market cycles are driven by: Mismatches in supply and demand Expectations about the future (based on imperfect knowledge) Human emotions fear and greed Changes in cycles are often started by Monetary or governmental policies Demographic trends Technological innovations.

30 Econ 101 for traders In strong or confident economic conditions, capital flows to sectors of the economy where expected returns are the highest. In weak or uncertain economic conditions capital flows to sectors and assets where there is less risk of a loss.

31 Why does it matter? How does this lead to YOU making money?

32 Keep the economics simple! When do you buy lemonade?

33 Follow the money What Works On Wall Street Over six-month and twelve-month periods, winners generally continue to win and losers generally continue to lose pg 443

34 Simple system offers proof it works! 11 Basic Sector ETFs IYR Real Estate XLV Healthcare IYT Transportation XLB Materials XHB Homebuilders SMH Semiconductors XLK Technology XLI Industrials XLF Financials XLU Utilities XRT Retail Simple Trading Rules 1. Sort the sectors daily by 6-month % change 2. Buy the leading sector on the open the day after it becomes #1. 3. Only buy the leading sector if the 6-month % change is positive.

35 Simple system offers proof it works! 11 Basic Sector ETFs IYR Real Estate XLV Healthcare IYT Transportation XLB Materials XHB Homebuilders SMH Semiconductors XLK Technology XLI Industrials XLF Financials XLU Utilities XRT Retail 140% 120% 100% 80% 60% 40% 20% 0% Model Performance vs. SPY Last 8 Years Last 7 Years Last 5 Years Last 3 Years This Year Model SPY

36 How to make this simple system much better The right universe of ETF to represent ALL trends that will persist (be big!) A proven measure of trend persistence Simple but intelligent entry and exit rules Proper position sizing Risk management

37 A universe of ETFs for all liquidity cycle trends Market Sector ETFs GDX Gold Miners XLU Utilities XLP Consumer Staples IYT Transportation XLB Materials XLI Industrials OIH Oil Services XLY Consumer Discretionary IBB Biotechnology IGE Natural Resources PBW Clean Energy Interest Rates BND (Total Bond Market) TMF (20+ Year Treasury 3x) U.S. Equity Indices Hedged SDS (Short SPY) Leveraged ETFs ERX Energy (3x) FAS Financial (3x) CURE Healthcare (3x) DRN Real Estate (3x) SOXL Semiconductors (3x) TECL Technology (3x)

38 Measuring the trend - MarketGauge s secret sauce Proprietary Trend Strength Indicator (TSI) Identifies the BEST ETFs to own for the coming weeks or months Finds persistent trends & eliminates most false signals Keeps you out of markets with negative momentum

39 Simple trading rules Trading signals generated on end of day data Enter and exit on the market open, so No need to watch the markets during the day Only enter a top 3 ranking ** Reduce TURNOVER** Don t sell just because the leader drops from the very top.

40 Most people who have a real desire to make money in the markets can learn how to trade, but then

41 Most experienced traders fail due to poor or neglected position sizing and risk management practices. Trading Strategy (so we ve solved this too) Position Sizing Risk Management

42 Proper position sizing how many shares to buy? Our strategy only holds 3 positions (at most) Very easy to manage correctly Position sizes need to be in alignment with you re risk tolerance (willingness to ride out drawdowns)

43 Risk management Simple stops and targets with good ratios Using traditional stops and targets will not always be the most profitable, but it tends to lead to a smoother equity curve. Be prepared for markets with negative momentum Buying the best ETF in group where all are falling does not make sense.

44 Quick review you can start now Relative Strength based strategies have been proven by Wall Street veterans Even a simple 6 month percent change ranking puts you fishing in the right pond for big trades Steal our list of ETFs because they are most likely to have persistent trends - driven by the liquidity cycle.

45 Steps to building a better system The right universe of ETF to represent ALL trends that will persist (be big!) A proven measure of trend persistence Simple but intelligent entry and exit rules Proper position sizing Risk management

46 Benefits of a completely automated system No second guessing your analysis Very easy to manage (takes only minutes per week) Provides objectively selected leading ETFs to trade with other trading strategies (i.e. short-term patterns)

47 RIGHT NOW This strategy is more relevant to your trading success than ever because In the last 7 years the U.S. Federal Reserve has executed unprecedented monetary stimulus experiment that no one can possibly know how will end!

48 Even the brightest minds on Wall Street can t fall back on traditional economic models! You ve heard them come up with terms to try to explain our unprecedented state of economic policies like The New Normal Quantitative Easing

49 Fortunately, with this strategy You don t have to predict the future. You don t need to be an economist. You simply

50 Follow The Money as it moves in waves into the various ETFs we track.

51 The STRATIGIC ADVANTAGES of ETFs You can dramatically Improve your profits Simplify your trading Reduce your risk 800% 600% 400% Outperformed S&P 500 by Over 17x Since % 643% And more! 200% 44% 0% S&P 500 ETF Sector (Basic) ETF Sector (Targets)

52 Don t miss the next video! You ll learn another strategic application of ETFs!