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To find out what an ETF trend is you first have to know a little something about ETFs in general. ETF stands for exchange traded fund. Now when most people hear the word fund they think mutual fund or hedge fund. However, ETFs are different from both of these.

While, mutual funds and hedge funds try to beat the market, ETFs try to mirror it. The first ETF was created back in 1993 and it tracked the S&P 500. Today there are thousands of ETFs that not only track major stock indexes like the S&P and Dow; but also a specific sectors like technology and banking, or commodities like gold and oil or even currencies like the US dollar and Euro.

So why would you want to trade with something that simply mirrors the market, instead of beating it? If you have read the newspapers anytime over the last 2 years or so, you already understand the risks involved with mutual and hedge funds. People have either lost a large percentage of their initial investment or even all of it if they were unlucky enough to invest in fraudulent ones like Bernie Madoff’s.

The fact is that mutual and hedge funds have huge problems. For example, they are not transparent, they are not easy to get in and out of and they are expensive. Really expensive! The typical mutual or hedge fund charge an annual fee of between 1-2% of money under management. This compares to 0.15% for the typical ETF (that is 0.15% not 15%!)

So as you can see ETFs are cheaper, but that is not the only reason they are better. They are better because of the ‘exchange traded’ part. This means you can buy and sell them just like stocks. You can go long or short, buy on margin, use limit and stop loss orders and even earn a dividend. Basically, if you can trade stocks you already have the tools to trade ETFs.

So where do ETF trends come into play? Like stocks, ETFs tend to trade in certain directions over a period of time. This creates a trend that smart investors can profit from, but you have to know how. ETF trend trading is a system that looks at historic price trends and attempts to predict where the ETF will go next.

However, this is only the beginning. To successfully and consistently make money from ETF trends you have to know a lot more than just finding the right ETFs and reading price charts. You need to know things like risk management and more importantly emotional management. Fortunately, you can learn about all these things for free with the ETF trend trading newsletter.

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