Commodity ETF
trading strategy
How to trade commodity exchange traded funds
to make money
I like to use this simple and profitable commodity etf trading strategy. ETF trading is important part of my personal trading I do on my trading account. I also advise to use exchange traded funds to my clients and friends as I think that they are really good trading vehicle especially for swing trading and also they are good for mid term position trades for multiple weeks or months.Commodities are important part of business life of a lot of companies and also consumers are confronted with their price when they want fill they car's tank - to show one example. The whole world is now using different commodities,from live cattle to oil, to accomplish economic goals. So they will be always important asset tradable on financial markets. Trading with commodity exchange traded funds like
gold etf,
silver etf
or oil etf,
natural gas etf,
or base metals like
copper etf
or nickel etf is good way how to participate on trading with physical commodities.
Basics of my ETF trading strategy
for commodity exchange traded funds
The basic idea is to use
relative strength analysis
between general CRB commodity index or ETF with symbol DBC and specific commodity group. You can use group ETFs like precious metals ETF, base metals ETFs, Energy ETFs, agriculture commodity exchange traded funds. Or you can use specific individual tickers like are gold ETF, silver ETF , Oil ETF and trade them, accordingly. First - as base index for relative strength comparing you can use broad commodity ETF with symbol DBC. Here is the chart:
Second - you will use charts of group ETFs to select ones with most relative strength for longs and with most relative weakness for shorts.Here are charts for group ETFs - each one for specific
group of commodities
. Agriculture ETF:
Energy ETF:
Precious metals ETF:
When you compare situation on the charts above you could see some important points:- Commodities are in strong uptrend. You would prefer to be long some commodity exchange traded funds then to be short.
- The most strength is in DBE and DBP. It tells you to find ETF trade setup in Energy ETFs or Precious metals ETF. There is much bigger chance for continuation of rise then in agriculture ETF DBA
You can of course go deeper and look for more specific ETF to trade withing strong group. Like Gold ETF or Silver ETF in Precious metals group.
Complete method for picking best ETF
I use similar method like is described in paragraphs above also to pick and trade etf exchange traded funds that represent also other markets like US stocks, bonds, currencies or international stock markets. This
complete method for picking the best etf securities
for my trades in etf portfolio is bread and butter of my every day trading activities.
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