Trying to find a winning trade by picking one single single stock doesn’t have to be frustrating. Casting a slightly wider net can make it easier to catch a handful of winners. This is exactly why ETFs, exchange traded funds have become so popular.
These easy to trade baskets of stocks or other financial products have become widely used and can be super effective. Take one of the ETFs we talked about in April for example. (you can read the article here) ESPO is an ETF that tracks the video gaming industry. This sector has been on a tear and has really done well over the last few years, but there has been some real losers in the group.
But by grabbing the whole collection, it mitigates the risk of choosing the one stock that gets run over by the booming industry. Take a look at the chart:
When we spotted ESPO back in April, it had already been climbing since last October. It has recently popped and is not showing signs of slowing down.
ETFs have grown so much that most of them have enough volume to provide tradeable patterns similar to traditional stocks. This means you can use those patterns to pick the ideal entry and exit points. Lee Gettess has a great approach for figuring out if a move is full of momentum or if it has run its course and is exhausted. Be sure to check out his extremely effective method here.
Keep learning and trade wisely,