Profit With ETFs by Gerald Gardner and Trent Gardner
Here’s a timing method you can use to trade exchange
Exchange traded funds (ETFs) are ideal
candidates with which to explore the
timing of investments. More than 400
ETFs are tradable and represent various
sectors of the US economy, specific country funds, and commodities. An advantage
to ETFs is that they offer daily continuous
pricing that mirrors the share price performance of
the underlying security with flexibility in the timing
of purchases or sales.
For this study we picked three funds to invest in
from a universe of 100. A backtest of our model
suggests that you can achieve a return of almost 18%
and a low drawdown of 8%. Before examining the
timing model, we will review some of the principles
that drive the development of the timing paradigm.
Timing is a technique of tracking market movements
to find patterns of prices so you can capitalize
on market behavior and anomalies. The primary aim
of the market timer is to focus on the volatility of
price movements and identify trends in price series.
Timing enhances returns and minimizes drawdown
by making buy or sell decisions using these distortions
of the market.