1. Buy 2-5 ETFs with high
liquidity. Each purchase order should
be at least $2,000, because commissions reduce profits. Always place
your orders 2-3 in increments to test the market.
2. Leveraged vs.
Non-Leveraged ETFs. Start with
non-leveraged ETFs - Leveraged (Ultra) ETFs will give you twice the
gains but also increases the risk of twice the losses.
3. Buying Signals.
Use the Market Timer's Fibonacci Retracement
support level crossover as a buying signal.
4. Risk Management -
Stop Loss Order.
Always put a (-1%) stop loss order after the
purchase. Update your stop loss when ever the closing price ended in
the red. Don't use trailing stops.
See chart for current exit price...
5. Taking Profits.
Use the Market Timer's Fibonacci
Retracement resistance level as sell limit order. Selling 1/2 of
one or all positions is prudent risk management for leveraged
positions. For non-leveraged ETFs I prefer a stop loss order to exit
the position.
6. Leveraged Positions.
Leveraged ETFs may double potential
profits. Use only when the VIX index is less then 25 to avoid getting
whipsawed. Buy leveraged ETFs after market timer confirms an up-trend
and the RSI indicator value is below 70.
7. Keep notes of all your
activity. My model portfolio provides
a good example.
8. Hedging your Portfolio.
Use non-leveraged (inverse) ETFs to trade the market when the market
consolidates or corrects. Never enter an inverse position to early, it
isn't worth the risk.
9. Beating the S&P 500
Index.
Don't try to beat the index, because you can't
day-by-day. Just remember when the market goes down, you be in cash to
catch up. The objective is to keep the portfolio in the black.
