Etf Profit Driver - Another Reason To Favor Exchange Traded Funds By Christopher Smith, BBA, JD At Isnare.com Ezine Articles

Holding equity positions during a sustained market downturn can decimate a portfolio. An alternative is to adopt a trading methodology that inserts capital into the market at safe entry points as a favorable trend emerges, then removes capital as the trend breakdown. Bill Poulos has compiled such a method in his ETF Profit Driver course.

Based on a study conducted a few years back, about 10% of all long-term mutual-fund assets were held in index funds. Those funds offer comparatively low fees track indexes familiar to most investors. The drawback of index fund investing has been holding those positions during market downturns.

In the past several years Exchange Traded Funds have started opening up significant new investment strategies. While ETF behave much like traditional index mutual funds, they have key differences.

The primary distinguishing feature between a mutual fund and an ETF is the fact Exchange Traded Funds are traded on exchanges. This means that you can quickly enter or exit an ETF position at any time during market hours. You will also find that many Exchange Traded Funds have robust, highly liquid options chains something traditional mutual funds cannot offer.

Also, because Exchange Traded Funds are traded on the exchanges it is possible to use stop orders, limit orders, and other advanced order routing. Combine that with increasingly lower commission rates and you have a highly flexible, very affordable investment vehicle. These features cannot be matched by the mutual fund industry.

As a result of this expansion of Exchange Traded Funds, small investors are gaining access to a growing array of different exchange-traded index products. Each year, numerous new Exchange Traded Funds are launched, tracking everything from clean-energy stocks to the nanotechnology industry.

A key driver in the popularity of Exchange Traded Funds is the failure by many mutual-fund managers to beat the market for extended periods of time, even as they collect big management fees. Instead, many advisers have turned to a strategy of lower-cost index funds, and increasingly, Exchange Traded Funds.

Exchange Traded Funds rising attractiveness also stems from the mutual-fund trading scandals of recent years. Because mutual funds are priced only once a day, after the market closes, some insiders used strategies designed to profit at the expense of the little guy. Exchange Traded Funds are priced like stocks, however. This means tat they trade throughout the day and are not vulnerable to these scams.

Each method taught in the ETF Profit Driver course identifies a safe point in the market to open a new ETF position. As such, you enter when market risk is at a relative low. Bill Poulos' money management rules then force an exit from the position, preserving capital and locking in profits, if and when the trend begins to fail.

ETF Profit driver encompasses a total of four methods for entering the market. Each of those four methods also incorporates at least three exit strategies take profits and avoid losses. Just as importantly, the system provides guidance for overall portfolio management and position sizing.

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