Trading ETFs

This Second Edition of the bestselling Trading ETFs offers an updated version of the definitive guide to this vital part of the capital markets. It contains numerous new examples of the techniques that author Deron Wagner uses in selecting the most timely ETFs to trade and underscores the core insights of his trading discipline "trade what you see, not what you think."

Written for professionals who are using, or should be using, ETFs as an asset class within their portfolios, as well as the individual investor who wants exposure to wider sectors and geographical regions than those available elsewhere.

• This revised edition of the classic resource focuses on the pros, cons, and potential pitfalls of trading the latest class of ETFs
• Includes inversely correlated and leveraged ETFs and the dangers, risks, and benefits associated with each new class of ETF
• Contains a refresher on the initial concept of ETF selection and new case studies on ideal entry and exit points as well as examples of real trades

This thoroughly revised and updated edition offers a "go-to" reference for understanding exchange-traded funds.

Foreword ix

Acknowledgments xi

Part I: ETF Overview and Selection

Chapter 1 Why Use Technical Analysis with ETFs? 3

Chapter 2 Major Types and Families of ETFs 11

Part II: ETF Selection Through Technical Analysis

Chapter 3 The Top-Down Strategy 31

Chapter 4 Finding Indexes with the Most Relative Strength 39

Chapter 5 Selecting the Best ETFs 55

Chapter 6 Supplementing the Basics 69

Part III: Timing Your Entries and Exits

Chapter 7 Strategies for Entry 87

Chapter 8 Strategies for Exit 99

Chapter 9 Ten ETFs Bought Long 113

Chapter 10 Ten ETFs Sold Short 139

Part IV: Fine-Tuning Your Strategy

Chapter 11 Tailoring Your Approach 165

Chapter 12 Additional Pointers 177

Afterword 191

Suggested Reading 193

About the Author 195

Index 197

DERON WAGNER is the founder and head portfolio manager of Morpheus Capital LP, a long/short equity hedge fund, as well as Morpheus Trading Group, a trader education firm specializing in exchange-traded funds and stocks. Recently, Wagner launched his Hong Kong–based company, DragonCharts, which helps foster the development of traders through education with live online stock analysis webinars, and includes a proprietary stock scanning platform. Wagner is the author of the first edition of this book and coauthor of The Long-Term Day Trader and The After-Hours Trader. He also appears in the popular DVD Sector Trading Strategies and is a frequent guest speaker at various financial seminars around the world. He has appeared on CNBC and ABC. Wagner teaches his ETF investment and trading methodology through his Wagner Daily and Wagner Weekly newsletters.

EXCHANGE-TRADED FUNDS (ETFs) are a large and growing part of the investment community. They are also one of the best ways to participate and profit from a wide range of sectors, industries, and geographical regions.

Nobody knows this better than author Deron Wagner, an experienced ETF trader and founder of Morpheus Capital LP. And now, in the Second Edition of Trading ETFs, he outlines a logical, step-by-step approach that will enable you to easily master ETF trading by using technical analysis and "trading what you see, not what you think."

Divided into four comprehensive parts, this reliable resource puts Wagner's successful trading style in perspective and reveals how you can effectively use it in your short-, intermediate-, or long-term trading endeavors. Chapter by chapter, it skillfully:

• Provides you with a brief history of the growth of ETFs and describes the major families and types of ETFs—from PowerShares and iShares to inversely correlated and leveraged ETFs
• Discusses how Wagner's "top-down" strategy of ETF trading always favors your odds of success in both up and down markets
• Examines strategies for determining ideal entry and exit points and walks you through real trades Wagner has made—with the actual outcome of the trades, using real capital, also presented
• Offers a host of pointers to help fine-tune your strategy after putting it into action—touching upon such topics as position sizing, getting efficient ETF executions, and identifying relative strength during intraday trading

Whether you're a full-time professional investor or someone who wishes to learn new techniques for actively managing your personal portfolio, you will benefit from this book. Thoroughly revised and updated to reflect today's dynamic market, Trading ETFs, Second Edition has what you need to succeed in this field.

EXCHANGE-TRADED FUNDS (ETFs) are a large and growing part of the investment community. They are also one of the best ways to participate and profit from a wide range of sectors, industries, and geographical regions.

Nobody knows this better than author Deron Wagner, an experienced ETF trader and founder of Morpheus Capital LP. And now, in the Second Edition of Trading ETFs, he outlines a logical, step-by-step approach that will enable you to easily master ETF trading by using technical analysis and "trading what you see, not what you think."

Divided into four comprehensive parts, this reliable resource puts Wagner's successful trading style in perspective and reveals how you can effectively use it in your short-, intermediate-, or long-term trading endeavors. Chapter by chapter, it skillfully:

• Provides you with a brief history of the growth of ETFs and describes the major families and types of ETFs—from PowerShares and iShares to inversely correlated and leveraged ETFs
• Discusses how Wagner's "top-down" strategy of ETF trading always favors your odds of success in both up and down markets
• Examines strategies for determining ideal entry and exit points and walks you through real trades Wagner has made—with the actual outcome of the trades, using real capital, also presented
• Offers a host of pointers to help fine-tuneyour strategy after putting it into action—touching upon such topics as position sizing, getting efficient ETF executions, and identifying relative strength during intraday trading

Whether you're a full-time professional investor or someone who wishes to learn new techniques for actively managing your personal portfolio, you will benefit from this book. Thoroughly revised and updated to reflect today's dynamic market, Trading ETFs, Second Edition has what you need to succeed in this field.