June 18, 2010 – The ETF Trend Following Playbook

Featured Trades: The ETF Trend Following Playbook


4) The ETF Trend Following Playbook. Turn over any rock these days, and you’ll find Tom Lydon of ETF Trends (click here at http://www.etftrends.com/ ) extolling the virtues of exchange traded funds (ETF’s) and exchange traded notes (ETN’s). So I thought it would be timely to read his book on the subject, The ETF Trend Following Playbook. Tom launches into a detailed explanation of these versatile new instruments, including the minutia on issuance, clearing, settlement, and even which end to hold up. He offers a simple trend following system that enables the uninitiated to approach the market in a disciplined and risk controlled fashion. His basic premise, quite correctly, is that ‘buy and hold’ is dead and that we all have to trade for a living, like it or not. He lists the many tools available today to the ETF trader which will give him the confidence they need to pull the trigger. Much of the rest of the tome is devoted to detailing the hoards of  ETF’s that are out there today, over 900, in stock indexes, sectors, bonds, currencies, commodities, precious metals, and even real estate, in both long and short flavors. He also explains the advantages and warns of the pitfalls of the 2X and 3X leveraged and ultra long and short ETF’s. You may have noticed that not a day goes by without me recommending an ETF, because they enable investors to take narrow rifle shots on very specific sectors of the global markets that can be executed through your garden variety online trading account. At only 198 pages, with a useful glossary of investment terms at the end, this highly compact, readable, and useful primer is a must read for anyone planning to seriously play in these securities. Tom certainly knows his stuff, and if you doubt me, please listen to the interview I conducted with him on Hedge Fund Radio last January by clicking here. For a great deal on the purchase of Tom’s book at Amazon, please click on the cover below.

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