ETF TRADING STRATEGIES REVEALED, BY DAVID VOMUND
|Daytrading exchange traded funds (ETFs)? Yes, it's possible, and this book tells how, along with strategies for trading ETFs for every market condition and every time frame, all in a concise, no-nonsense manner. ETF Trading Strategies Revealed by David Vomund, head of Vomund Investment Management, is a highly readable and, dare I say, entertaining for someone with a background in technical analysis. And in my case the book was highlighted as the tightly knit writing spun out one gilt-edged trading gem after another. If you fall into the novice trader category and don't know a 20-period exponential moving average from a moving van, or whether a small-scale entry is aggressive or conservative, you may need to be logged into Investopedia.com while you read the book.
But this very complexity makes the book worth reading and owning. Its trading styles uses long-established, well-tested technical analysis charts and indicators, and as the market changes or your investing goals change, second and third readings bring out pertinent information that you never noticed in a previous perusal.
The book begins with a definition of an ETF, tax implications and fees involved in trading ETFs, and comparing them to trading standard mutual index funds, then quickly moves to the main attraction: Linda Bradford Raschke. Raschke is a well-known money manager and highly sought after speaker. It is a treat to read David Vomund's interview — market guru to market guru — with Raschke's clarity and directness as she divulges matter-of-fact trading expertise, sure to put anyone on the right track to investing success.
Raschke is followed by a chapter written by professional trader Steve Palmquist. He presents a trading strategy for ETFs with an example using range-bound markets while discussing "rat tails" and Bollinger Bands. In addition to defining range-bound versus up and down trending markets, risk control, and other basic trading concepts, Palmquist emphasizes that "my style of trading is determined by the market... Adapt to the market — it will not adapt to you." That trading philosophy is reflected throughout the book.
There are no predictions of future market movement. As other market pundits have found, it's inadvisable to print something that can be disproved in a month. Palmquist's techniques, which for now use current examples of the highest-rated sectors, will always be applicable to ETFs and individual stock trading.
The second half is a simple look at two market rotation strategies. The first strategy divides EFTs along style lines — large, mid-, and small cap, while the second divides them by sector, with the most aggressive trading including foreign ETFs. Sound familiar? Many retirement funds offer similar types of ETFs and mutual funds. This trading system is tailor-made for those long-term limited-trading types of portfolios.
Vomund backtested various strategies and presents his results with specific buy/sell triggers. True, he refers the reader to his website for relative strength rankings computed by AIQ, the company for which he writes a well-respected newsletter, but he also explains how he came by them. As he notes, you can follow as much or as little of his trading strategy as your personality and trading psychology will allow. In fact, the book ends with a smattering of trading psychology advice.
In a world full of overblown trading guidance, this book is low key and specific and I have no doubt these systems work. If you want to increase your returns and eventually double your money, ETF Trading Strategies Revealed is good, solid advice for the sane investor.
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