Are ETFs the better stocks? As so often, the answer is yes and no. They are funds and as such intrinsically diversified, most of them at least. This advantage is on the other hand a shortcoming. Stocks are the best way to participate concentrated in a growth story. Fortunately both are traded on the same exchange so that the question is not really important.
One fine way to trade ETFs is to view them as the base of your investment. There are Short-ETFs and commodity or currency tracking ones. The ETF trading pool offers opportunities even when the stock market tanks. And that is the real strength of ETFs. There is always an ETF to pick right now giving the trading investor a trading signal while the stock market looks sour.
Conversely stocks are in this trading scenario a supplement to the ETF trading. When the whole market starts, it pays off to invest in growth stocks. If there is a special stock situation, it is fine to act on this trading signal and switch part of your capital from your ETFs into this stock.
In many other market situations stocks alone are not the right answer and that is the reason why ETF trading grew so fulminantly over the last years. So, how to trade them? One drawback is what otherwise is their strength – and that is their diversity.
The problem is the individual ETF itself. It is a fund and has as such specific conditions dictating how it is managed and what collateral is in what way associated with the fund. This is much more difficult to find out and understand or better judge than with a stock.
The outstanding reason for this is that for a stock it is always possible that its value drops substantially over night. You have to expect that and reflect it with your money management. With a fund you should not have to expect something like a total loss, but that is not true for all ETFs. The devil is in the details. At this point it may be helpful to receive trading signals for preselected ETFs from a pro (guess who is that…)
ETFs allow for a convenient trading style. You shoudn’t have to hunt them intraday. What is more convenient as to have an ETF signal service then? Even only one single good trading or investing idea at the right time may pay for the lifetime of the subscription!