New book by Larry Connors Click here Improve your trading - See how
Some of the best trading opportunities are in the least well-known investments. In my most recent posts, I've looked at water resources and clean energy as possible sector themes for the future that can be traded from any stock market account with Exchange Traded Funds (ETFs). Now let's go to another ETF theme: globalization.
With a single stock, we can buy equity performance from almost any major region of the world. Below we have a chart of the S&P 500 Index (blue) (SPY | Quote | Chart | News | PowerRating); the Vanguard Pacific ETF (yellow) (VPL | Quote | Chart | News | PowerRating); the Vanguard Europe ETF (red) (VGX | Quote | Chart | News | PowerRating); and the Vanguard Emerging Markets ETF (light blue) (VWO | Quote | Chart | News | PowerRating). Going back to March, 2005, we can see that the most popular of the indices--the S&P 500--has also been the most punk performer. In terms of directional movement and volatility, we've had better trading opportunities from almost any other major portion of the world.
The best investment talent in the world--including many hedge fund and
investment bank traders I've been privileged to know--shares one thing in
common: they are not restricted to particular trading instruments or asset
classes. They also do not limit their trades to vehicles within a
particular set of national boundaries. They go where the opportunity
is, whatever and wherever that might be.
With ETFs, it is increasingly possible for individual traders to pursue a world
full of opportunities. Value vs. growth? National vs. international? Equities
vs. fixed income? Small cap vs. Large? Currencies, commodities, equity sectors?
All can be traded from a single stock market account.
Old habits die hard. We tend to gravitate to the known trading instruments. But
there's a trading world at your fingertips--and it's expanding every month.
Brett N. Steenbarger, Ph.D. is Associate Clinical Professor of Psychiatry and Behavioral Sciences at SUNY Upstate Medical University in Syracuse, NY and author of The Psychology of Trading (Wiley, 2003). As Director of Trader Development for Kingstree Trading, LLC in Chicago, he has mentored numerous professional traders and coordinated a training program for traders. An active trader of the stock indexes, Brett utilizes statistically-based pattern recognition for intraday trading. Brett does not offer commercial services to traders, but maintains an archive of articles and a trading blog at www.brettsteenbarger.com and a blog of market analytics at www.traderfeed.blogspot.com. His book, Enhancing Trader Performance, was recently released for publication (Wiley).
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The Connors Group, Inc. ("Company") is not an investment advisory service, nor a registered investment advisor or broker-dealer and does not purport to tell or suggest which securities or currencies customers should buy or sell for themselves. The analysts and employees or affiliates of Company may hold positions in the stocks, currencies or industries discussed here. You understand and acknowledge that there is a very high degree of risk involved in trading securities and/or currencies. The Company, the authors, the publisher, and all affiliates of Company assume no responsibility or liability for your trading and investment results. Factual statements on the Company's website, or in its publications, are made as of the date stated and are subject to change without notice.
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HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING AND MAY NOT BE IMPACTED BY BROKERAGE AND OTHER SLIPPAGE FEES. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.
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