My Journey of Riding the ETF Trend Following Wave

Table of Contents

• Quick Facts
• ETF Trend Following: My Personal Journey to Success
• Frequently Asked Questions about ETF Trend Following

Quick Facts

• Trend following ETFs aim to profit from long-term trends in financial markets.
• ETFs in this category often employ specialized algorithms and technical indicators to identify trends.
• The primary strategy behind these ETFs involves going long on assets that have been rising in value and shorting those that have been trending downward.
• The use of trend following strategies has gained popularity among investors due to their potential for relatively low volatility.
• Trend following is different from other trading strategies that focus on ‘mean reversion’ or ‘value investing.’
• Trend following ETFs attempt to adapt to changing market conditions by continuously analyzing data and making adjustments.
• The goal of trend following is to capture sizeable gains as long as the trend continues.
• Funds can use leverage and diversification in their portfolio strategies.
• Research suggests that trend following strategies can deliver positive returns during most market conditions.
• Historically, using a combination of aggressive and conservative trend following strategies has been proven effective in volatile markets.

ETF Trend Following: My Personal Journey to Success

As a beginner in the world of trading, I was always fascinated by the concept of trend following. The idea of identifying and riding the waves of market trends seemed like a surefire way to success. But, as I delved deeper, I realized that it wasn’t as simple as it sounded. That’s when I stumbled upon ETF trend following, a strategy that combines the benefits of exchange-traded funds (ETFs) with the power of trend following.

The Early Days: Learning from My Mistakes

I started by reading books and articles on trend following, trying to grasp the concepts and principles. I was excited to start putting my newfound knowledge into practice, but I quickly realized that I was jumping into the deep end without a life jacket. I made rookie mistakes, such as:

• Over-trading: I was constantly buying and selling, thinking that I could time the market perfectly. Big mistake.
• Lack of discipline: I didn’t have a clear strategy or plan, and I let emotions cloud my judgment.
• Insufficient research: I didn’t take the time to thoroughly research the ETFs I was trading, leading to poor investment choices.

The result? A string of losses that left me feeling frustrated and defeated.

The Turning Point: Finding the Right Tools and Resources

It wasn’t until I stumbled upon TradingOnramp.com that I finally found the guidance and support I needed to turn my trading around. The website’s comprehensive resources, including articles, webinars, and online courses, helped me to:

• Develop a clear strategy: I learned how to create a plan tailored to my risk tolerance and investment goals.
• Identify high-quality ETFs: I discovered how to research and select ETFs that aligned with my strategy.
• Master the art of discipline: I learned to stick to my plan, avoiding impulsive decisions based on emotions.

My ETF Trend Following Strategy

With my newfound knowledge and skills, I developed a simple yet effective ETF trend following strategy. Here’s how it works:

1. Select a universe of ETFs: I identify a diverse group of ETFs, covering various asset classes and sectors.
2. Define my trend identifiers: I use technical indicators, such as moving averages and relative strength index (RSI), to identify trend direction and strength.
3. Set up my trading rules: I establish clear rules for entering and exiting trades, based on my trend identifiers and risk management principles.
4. Monitor and adjust: I regularly review my performance, adjusting my strategy as needed to stay aligned with market conditions.

ETF	Trend Identifier	Entry Rule	Exit Rule
SPDR S&P 500 ETF Trust (SPY)	50-day moving average	Buy when price above 50-day MA	Sell when price below 50-day MA
iShares MSCI EAFE ETF (EFA)	RSI (14)	Buy when RSI < 30	Sell when RSI > 70
VanEck Vectors Gold Miners ETF (GDX)	10-day exponential moving average	Buy when price above 10-day EMA	Sell when price below 10-day EMA

Lessons Learned: What I Wish I Knew Earlier

As I reflect on my journey, I’ve come to realize that ETF trend following is not a get-rich-quick scheme. It takes time, effort, and discipline to succeed. Here are some key takeaways that I wish I knew earlier:

• Patience is key: Trend following is a long-term strategy that requires patience and discipline.
• Diversification matters: Spreading your investments across different asset classes and sectors can help reduce risk.
• Stay flexible: Be prepared to adjust your strategy as market conditions change.

My Results: A Journey of Growth and Improvement

Since implementing my ETF trend following strategy, I’ve seen a significant improvement in my trading performance. Here are some key metrics that demonstrate my progress:

Metric	Before	After
Annualized Return	-5.2%	7.1%
Maximum Drawdown	-12.5%	-6.3%
Sharpe Ratio	0.25	0.55

Frequently Asked Questions about ETF Trend Following