How To Successfully Trade ETFs

Today’s trading lesson is on the basics of finding the best ETFs to trade each day. For many of you this will be refresher information and for some of you it will be new information.

When we create our ETF trading models we look for 4 main things.

1. Is the ETF above or below the 200-day moving average? If its above, we want to look for long signals. If its below, we want to be looking for short signals.

2. How oversold is the ETF when its above the 200-day (the more the better), and how overbought is it below the 200-day (again, the more the better)?

3. Where is the 2-period RSI? As we have quantified and published for over 5 years, the 2-period RSI is in our opinion the single best indicator to identify how overbought and oversold ETFs are.

4. When do we exit the trade? Two exits are excellent. Closing crosses above the 5-period moving average for long positions is good. Closing prices below the 5-period moving average for shorts is also good. So is using the 2-period RSI as the exit indicator. Readings above 70 are very good for exiting long positions. Readings below 30 are very good for exiting short positions.

You can do a lot with great things with these 4 simple rules. And when they are used correctly, they can reate some wonderful trading strategies that have historically predicted the direction of ETFs from 70%-90% of the time going all the way back to the beginning of the trading of the SPYs in 1993.

If you would like to learn 7 of our best ETF Trading Strategies, they will be published in my upcoming book, High Probability ETF Trading: 7 Professional Strategies to Improve Your ETF Trading. The book teaches you 7 ETF strategies which have been quantified on many of the most popular and liquid ETFs traded. Each of the strategies can be used both on the long side and the short side for your ETF trading.

If you would like to order a copy of High Probability ETF Trading: 7 Professional Strategies to Improve Your ETF Trading, click on the link or call toll free 1-888-484-8220 ext. 1. The cost of the book is $49.95 ($39.95 if you order it now) and it includes a free bonus report on trading leveraged ETFs. The book will be available for download next Friday (in time for you to read over the three-day holiday weekend) and a hardcover copy will be sent to you in late June. To order your copy now, click here.

Larry Connors is CEO and Founder of and Connors Research.