What Are Exchange Traded Funds?
Exchange Traded Funds (ETF’s) are investment funds that track an index, commodity, bonds, or some basket of assets. Throughout the course of the trading day, an ETF will trade at or near the underlying value of the assets it holds. In recent years, ETF’s have become enormously popular because they are easy to understand and trade much like individual stocks.
Exchanged Traded Funds can provide you with a comprehensive overview of the market – which sectors are hot and which ones are lagging. While trading ETF’s may not be as attractive as trading the big-name companies that you hear in the headlines (Microsoft, Amazon, Netflix, etc.), they offer a number of advantages for the average retail trader and investor.
Top 3 Advantages of Trading ETF’s at Top Stock Picks:
1.) Limited Universe of Highly-Liquid ETF’s:
As a whole, there are thousands of of ETF’s to potentially trade, but Jeff Bishop at Top Stock Picks only focuses on the most popular ones with substantial volume. In all, there are only about 10-20 ETF’s that Jeff monitors on a regular basis. That type of focused approach allows Jeff and his members to capture massive profits on a consistent basis.
There’s typically an underlying ETF like IBB, for example, which tracks the biotechnology index. Then there’s a pair of leveraged ETF’s that can be traded off of that underlying ETF depending on if you want upside exposure (LABU) or downside exposure (LABD). Here’s the short list of ETF’s that Jeff Bishop and his members are tracking on a regular basis.
- IBB (Biotech ETF) – LABU & LABD
- GDX (Gold Miners ETF) – NUGT & DUST
- GDXJ (Junior Miners ETF) – JNUG & JDST
- VIX (Volatility Index) – VXX, UVXY & XIV
- UNG (Natural Gas Index) – UGAZ & DGAZ
- XOP (Oil & Gas Exploration ETF) – GUSH & DRIP
- USO (US Oil Fund) – UWT & DWT
- XLE (Energy Select Sector ETF) – ERX & ERY
- IWM (Russell 2000 Small Cap ETF) – TNA & TZA
2.) Versatility of Inverse and Leveraged ETF’s:
Another advantage of ETF’s are the inverse and leveraged capabilities. Inverse ETF’s provide downside exposure to the underlying ETF. Taking the Biotech ETF (IBB) for example again, entering a position in LABD would mean you have a bearish stance on the sector. The beauty of inverse ETF’s is that you can effectively take short positions on an entire index, sector, or basket of assets without the theoretical unlimited risk that comes along with Shorting.
Then there are Leveraged ETF’s, which provide amplified exposure to the underlying ETF – either to the upside or downside. Taking the Russell 2000 Small Cap ETF (IWM) for example, TNA provides 3:1 exposure to the upside and TZA provides 3:1 exposure to the downside. So if the IWM goes up 1%, then TNA goes up 3% and TZA goes down 3% as a result. The increased volatility is a blessing for active short-term traders. Overall, leveraged ETF’s can help traders increase exposure with less capital.
3.) Consistently Profitable Trade Ideas:
The overarching goal is to build a community of great traders – that’s Jeff Bishop’s primary focus. He’s looking for people who are willing to learn how to analyze market trends, look for their own setups, and execute on their own ideas. Those who simply want to make money piggybacking, or blindly mirroring, probably won’t experience much success.
If members study the video lessons, webinars, watch lists, and ETF Cheat Sheet, then the real-time text & email alerts will become much more beneficial. If you take the educational approach, you’ll eventually be able to find these profitable setups completely on your own.
Real Life Top Stock Picks Trade Example – DWT:
BUY ALERT on 4/17 @ $23.50 (2,000 shares)
SELL ALERT on 4/19 @ $25.14 (1,000 shares) = $1,600 Profit
SELL ALERT on 4/21 @ 27.06 (1,000 shares) = $3,500 Profit
Total Profit in 5 Days = +5,100
The Takeaway: You Can Consistently Capture Profits Like These Alongside Jeff Bishop as a Dedicated Student at Top Stock Picks.
Written by Matt Thomas (@MattThomasEST)
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