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If you want to read a book available on Kindle, such as my Truth About ETF Rotation e-book, you have several choices.
Of course you can just buy the top-of-the-line Kindle Fire HD.
Or, if you’re looking for a zero dollar option, because maybe you just want to check out an e-book that’s being offered Free on Kindle, you can:
Check out the full selection of FREE Kindle Reading Apps for Most Devices from Amazon.comFiled in Outside Products Reviewed
My focus for the past year has been backtesting ETF rotation strategies. At this point, I’ve published the backtesting on Amazon, recorded training videos, created a portfolio rotation simulator, and established a live account for forward testing. In this article, I want to give you a summary of how to invest in Exchange Traded Funds (ETFs) using a rotation strategy.
Individual investors, particularly with a self-directed IRA, can take advantage of rotation strategies without putting in 10,000 hours to become a professional trader. Professional money-managers can apply these principals too — if they’ve let go of the assumption that they need to spent a 40-hour work week on the market.
The key to investment success is: Buy Low and Sell High. Easier said than done, of course. What trips many investors up is the notion that they need to buy at the extreme low and sell at the extreme high. Not so. It is really only necessary to buy lower than one sells most of the time, and control losses the rest of the time, to come out with a profit.
Therefore the most important thing is to identify a good investment as it is moving up, because it is the upward movement that produces the profits. Relative strength is one proven metric for finding investments moving up. A simple way to quantify relative strength is Rate of Change (RoC) which is just the percentage gain over a certain time period.
Investors should expect difficulty so it is considered wise to diversify their holdings. Being ready to switch to better prospects also increases an investor’s chance of coming up with profits, as demonstrated by the backtesting results for ETF rotation compared to buy-and-hold of a diversified portfolio.
An Exchange Traded Fund or ETF is similar to a mutual fund in that the ETF holds a variety of stocks and the ETF’s value changes as the underlying stock prices fluctuate. ETFs may invest in stocks, bonds, commodities and futures. Most ETFs go up when their holdings go up. Some ETFs, called inverse funds, are designed to increase in price when their underlying index goes down. This gives investors a straightforward means to hedge their bets and short the market.
ETFs tend to be passive investment vehicles like index funds. An index fund is an ETF or mutual fund that tracks an index, such as the S&P 500, by investing in the component stocks in the index. It turns out that this approach of following an index often comes out ahead of active management strategies that attempt to pick winning stocks.
ETFs also exist that invest in international stock indices, which is great because us individual investors have little hope of becoming global stock-picking experts.
The steps to creating a simple ETF rotation strategy come in two parts: the background work to set it up and the on-going execution of the strategy.
For set-up, one needs to decide:
For the on-going operation of an ETF Rotation strategy, the steps are:
More information, parameter settings, and backtesting results are in my book: Truth About ETF Rotation: Fund Your Retirement By Investing In Top Exchange Traded Funds in One Hour Per Week (Volume 1).Filed in Strategy Development
Tags: ETF Rotation
As I’m preparing for the MoneyShow San Francisco, I want to share a few thoughts on ETF rotation:
Click here to read my high-level article on ETF Rotation
Beyond the high-level introduction, I am working on a detailed comparison of three strategies:
Should be interesting!
Attend the MoneyShow San Francisco — free! — to see my latest back test results of ETF Rotation strategies.Filed in Classes, Strategy Development
The MoneyShow Network interviewed me about trading metrics — what to look for if you are starting from scratch or if you are buying a system. Click the graphic above to watch.Filed in Strategy Development
Tim Bourquin of the Traders Expo interviewed me shortly after I had (manually) backtested several option trading strategies. Watch the video above to hear how it went.Filed in Strategy Development
You might want to check out my latest research on sector rotation:
Fidelity Investments commissioned me for the Viewpoint article and it turned out quite good in terms of decent return with limited overhead and risk.
Even better, after the article was published, I improved on the strategies to get higher performance and more consistency.
I’m continuing to research to flesh out a complete trading strategy which I plan to discuss at the MoneyShow Las Vegas:
|Thursday, May 17 • 7:45 am – 8:30 am|
Sector Rotation with ETFs and Stocks
Compare performance of various rotation strategies, applied to sector exchange traded funds (ETFs), style ETFs, and stocks. Focus on simple strategies for staying invested in the top ETFs as well as strategies for identifying beaten-down areas to buy low. Experiment with a long/short portfolio. Learn how the strategies rated based on Fidelitys Wealth-Lab Pro® portfolio simulation of the last decade in the stock market. Find out which sector ETFs are leading with momentum today and which may present value opportunities.
(Wealth Lab Pro is a registered trademark of FMR, LLC)
I hope you can make it to Las Vegas and I’ll keep you posted on the new strategy as it develops.Filed in Sector Rotation, Technical Strategies