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ETF Trading Strategies

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Did you know that Exchange Traded Funds (ETFs) were originally created to replicate the performance of stock market indices? The industry has now grown into providing traders and investors access to ETF strategies across a diverse range of market sectors such as artificial intelligence, robotics, alternative energy, commodities, currencies and much, much more.

In fact, the growth of the ETF industry has been so huge that in 2005 the assets of global ETFs was only around $417 billion compared to $4.69 trillion in 2018. This is just one reason why traders and investors are keen to learn more about ETF trading strategies and why you should be too.

ETF trading strategies

In this article we cover:

  • What are ETFs?
  • What is an ETF strategy?
  • How to start trading an ETF strategy
  • Three ETF trading strategies
  • And more!

ETF trading strategies - What are ETFs?

Exchange Traded Funds, or ETFs, were first created in 1990 in Canada and were originally designed to track the performance of a specific index. For example, the Vanguard S&P 500 UCITS ETF aims to track the performance of the S&P 500 stock market index. Over the years the ETF industry has boomed providing traders and investors access to a range of different market sectors that would not otherwise be available to them.

For example, an investor may be interested in trying to capitalise on the growth of artificial intelligence (AI). Instead of trying to find the right company to invest in, they could research the Global X Robotics & Artificial Intelligence ETF to see if it suits their needs, as the ETF invests into companies that stand to benefit from the adoption of robotics and AI.

ETFs trade on different stock exchanges around the world, such as the New York Stock Exchange. Therefore, just like company shares listed on a stock exchange, an ETF can be bought and sold during the stock exchange opening hours. You can learn more about ETFs in the 'What are ETFs' article.

What is an ETF strategy?

An ETF strategy is a methodology created by traders and investors to select the best ETFs to trade or invest in which suit their individual needs. Essentially, it helps to make buy and sell decisions using consistent tools and data points. The methodology will typically involve a range of different types of analysis which mainly fall under technical analysis or fundamental analysis.

  • Technical analysis. This type of analysis involves analysing the movement of price to identify patterns of repeatable behaviour. Many traders will also use technical indicators such as moving averages, the stochastic oscillator on a price chart of an ETF to look for patterns which result in buying or selling opportunities. You can learn more about technical analysis strategies in the 'Trading Strategies' article, as well as further down this article when we cover ETF trading strategies.
  • Fundamental analysis. This involves analysing fundamental data such as changes in global economic activity, central bank policy as well as macro-economic indicators that identify changing trends in the world economy, technology and climate. You can learn more about the latest economic events in Admiral Markets' Trader's Blog and Fundamental Analysis section on the Analytics page.

Most traders and investors will use a combination of both technical and fundamental analysis. However, short-term traders such as day traders, who only hold trades for minutes or hours, will be more focused on a trading strategy that is predominantly focused on just technical analysis. Fortunately, the technical analysis tools used to trade on other markets such as currencies, shares, and commodities can also be used on ETFs.

If you would like to learn more about technical and fundamental analysis then why not register for the Admiral Markets Trading Spotlight webinar? In these free, live sessions, taken three times a week, professional traders show you a wide variety of technical and fundamental analysis trading techniques you can use to identify common chart patterns and trading opportunities in a variety of different markets.

To reserve your spot in these complimentary webinars, simply click on the banner below:

Learn ETF trading strategies with Free Trading Webinars

How to start trading an ETF strategy

Before we look at five different ETF trading strategies you can get started with, it's important to have the right trading and investing tools from the outset.

1. Choose the right broker

Trading and investing in ETFs is very similar to trading and investing in shares. If you want to buy shares in a company, such as Apple, you need to find someone who not only owns some Apple shares but is also willing to sell them to you. This is what your broker does for you. Through your broker's trading platform they route your buy and sell orders to other buyers and sellers through their connection with the stock exchange that lists the shares of the company or ETF you are trading.

With the right broker, you can buy and sell ETFs in seconds without meeting the person on the other side of your trade. A broker will also hold your capital to trade or invest with so it's important to choose the right broker - ideally one that offers the highest regulation, security and safety as possible.

For example, investment firms operating under the Admiral Markets trademark offer the highest regulation from the UK Financial Conduct Authority, Australian Securities and Investments Commission, Estonian Financial Supervisory Authority and Cyprus Securities and Exchange Commission. With Admiral Markets UK Ltd you can also:

  • Open multiple types of trading and investing accounts such as Invest.MT5 where you can buy shares in companies and ETFs from 15 global stock exchanges and receive free real-time market data.
  • Open an Trade.MT4 trading account to trade via CFDs (Contracts for Difference), so you can go long and short a market to potentially profit from rising and falling markets, as well as access leverage of up to 1:500 for professional categorised clients and up to 1:30 for retail categorised clients.
  • Access the most popular trading platform in the world, MetaTrader, for Web, Windows, Mac, iOS and Android operating systems.
  • Trade on multiple asset classes.

Did you know you can access all of these features and test drive Admiral Markets as a broker by opening a FREE demo trading account? This allows you to trade in a risk-free environment until you are ready for a live trading account. To open your free demo account, simply click the banner below:

Use ETF trading strategies With A FREE Demo Trading Account

2. Use the best ETF trading platform

Your trading and charting platform will help you to access important information you need to trade ETFs. This includes market news, charts, historical prices and technical trading indicators. With advanced trading technology, you can now have your charting platform and brokerage platform all in one place. Admiral Markets offers the following MetaTrader trading platforms:

Did you know that you can download all the MetaTrader platforms provided by Admiral Markets UK Ltd completely FREE? To start your download simply click on the banner below:

Use ETF trading strategies With MetaTrader 5

How to view a chart of historical prices on an ETF

Once you've downloaded the free platform, follow these steps to view the ETFs available to trade on, as well as a chart of historical prices:

  1. Open your MetaTrader trading platform.
  2. Open the Market Watch window by selecting View from the tabs above and then Market Watch, or by pressing Ctrl+M on your keyboard.
  3. Right-click on the Market Watch window and select Symbols.
  4. Search for your symbol if you know it, or click on ETF CFDs on the left-side of the Symbols window.

ETF strategy - Historical prices on an ETF

  1. You will now be able to see a selection of different ETF CFDs available to trade on, as well as details such as the currency the ETF trades in, opening and closing hours and more.
  2. After clicking OK, this will add the instrument to your Market Watch window.
  3. From the Market Watch window, you can simply select the symbol and then drag it onto the chart.

How to place a trade on an ETF

To place a trade, you first need to have the chart on the instrument you want to trade on. The steps above will help you do this. Once this is done, you can open up a trading ticket using the steps below:

  1. Right-click on the chart.
  2. Select Trading.
  3. Select New Order, or press F9 on your keyboard.
  4. A trading ticket will open for you to input your entry price, stop loss and take profit levels and unit size (volume).

ETF trading strategies - Trading ticket in the MetaTrader 5 trading platform

A screenshot of a trading ticket in the MetaTrader 5 trading platform provided by Admiral Markets UK Ltd.

Disclaimer: Charts for financial instruments in this article are for illustrative purposes and does not constitute trading advice or a solicitation to buy or sell any financial instrument provided by Admiral Markets (CFDs, ETFs, Shares). Past performance is not necessarily an indication of future performance.

To learn more on how to use the MetaTrader trading platform provided by Admiral Markets watch the video below:

Three ETF trading strategies

Below are just three ETF trading strategy ideas you can get started with. To learn more about picking the best ETFS to trade on, read the ' How to Start Investing in ETFs with €1,000.'

1. Invest in the stock market, and its sectors, with ETFs

Using an ETF investing strategy to invest in the stock market is one of the most popular uses of ETFs. For example, if an investor had a positive, or bullish, outlook on the American stock market then they could simply buy shares in the Vanguard S&P 500 UCITS ETF. This ETF tracks the performance of the S&P 500 stock market index.

However, traders and investors can also be more specific into what part of the stock market they would like to invest by using sector ETFs. In the US stock market companies are often categorised by which sector they fall under. These include retail, consumer discretionary, consumer staples, energy, technology, materials, health care and others.

For example, let's say an investor wanted to gain exposure to health care. They could choose the Health Care Select Sector SPDR Fund ETF (XLV). Instead of choosing just one healthcare company the investor could choose this ETF which invests into some of the largest healthcare companies in the world as it's top five holdings show:

ETF trading strategies - Health care select sector SPDR Fund

Source: State Street SPDR Global Advisors, 13 February 2020

Below is a monthly price chart of the ETF on the MetaTrader 5 trading platform provided by Admiral Markets:

ETF trading strategies Monthly - Data range: from 1 January 2007 to 13 February 2020

Source: Admiral Markets MetaTrader 5, XLV, Monthly - Data range: from 1 January 2007 to 13 February 2020, accessed on 13 February 2020 at 5:15 pm GMT. Please note: Past performance is not a reliable indicator of future results.

SPDR also provide ETFs in all of the sectors. These can be seen typing in 'SPDR' in the Admiral Contracts Specification page, as shown below:

ETF strategies - SPDR

A screenshot of the Admiral Markets Contract Specification page, searching for 'SPDR.'

With the Admiral Markets Invest.MT5 account, investors can invest in stocks and ETFs from 15 of the largest stock exchanges in the world, as well as enjoy other benefits such as:

  • The ability to invest in thousands of stocks and ETFs from 15 of the largest stock exchanges in the world.
  • Open an account with just €1 minimum deposit and invest from just $0.01 per share with minimum transaction fees of just $1 on US stocks.
  • Receive free real-time market data, with no delays, at no extra cost.
  • Create a stream of passive income by collecting dividend payouts.
  • Use the world-renowned MetaTrader 5 multi-asset class trading platform.

You can get started right now by clicking the banner below and enjoying all of the features above and more!

Invest in Stocks & ETFs

2. Invest in commodity ETFs

Through commodity ETFs, users can gain exposure to a wide variety of commodities covering metals, energy, agriculture and more. For example, if an investor wanted to purchase gold for the long-term, then instead of buying gold bars they could simply buy a gold ETF.

In the Admiral Markets Contract Specification page users can search the range of ETFs available in the Precious Metals category, as shown below:

etf investing strategy - ETFs available in the Precious Metals category

A screenshot of the Admiral Markets Contract Specification page showing ETFs and Precious Metals.

In the above, screenshot there is a large range of gold ETFs available as well as other metal ETFs such as platinum and silver.

3. Access international markets (emerging market ETFs)

Through ETF strategies, traders and investors can gain exposure to markets that would not otherwise be available to them. For example, emerging market ETFs have grown in popularity as investors have been interested in the growth prospects of emerging market countries.

In the Admiral Markets Contract Specification page, users can access a large range of emerging market ETFs, as shown below:

Contract Specification page showing ETFs and Emerging Markets Equity

A screenshot of the Admiral Markets Contract Specification page showing ETFs and Emerging Markets Equity.

Below is the monthly price chart of the Schwab Emerging Markets Equity ETF (SCHE).ETF strategy - SCHE, Monthly - Data range: from 20 January 2013 to 15 February 2020

Source: Admiral Markets MetaTrader 5, SCHE, Monthly - Data range: from 20 January 2013 to 15 February 2020, accessed on 15 February 2020 at 1:15 pm GMT. Please note: Past performance is not a reliable indicator of future results.

Users can also gain exposure to different industries, sectors and debt instruments through ETFs thereby creating a truly diversified portfolio.

Why use ETF trading strategies with Admiral Markets?

With Admiral Markets, you can:

  • Open multiple types of trading and investing accounts such as Invest.MT5 where you can buy shares in companies and ETFs from 15 global stock exchanges and receive free real-time market data.
  • Open an Trade.MT4 trading account to trade via CFDs (Contracts for Difference), so you can trade long and short on ETFs to potentially profit from rising and falling markets, as well as access leverage of up to 1:500 for professional categorised clients and up to 1:30 for retail categorised clients.
  • Access the most popular trading platform in the world, MetaTrader, for Web, Windows, Mac, iOS and Android operating systems.

If you're feeling inspired to start trading, or this article has provided some extra insight to your existing trading knowledge, you can begin to open your own trading account by clicking on the banner below:

trading ETF strategies With MetaTrader 5

About Admiral Markets

Admiral Markets is a multi-award winning, globally regulated Forex and CFD broker, offering trading on over 8,000 financial instruments via the world's most popular trading platforms: MetaTrader 4 and MetaTrader 5. Start trading today!

This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or recommendation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.


Admiral Markets Group consists of the following firms:
Admiral Markets Pty Ltd
Regulated by the Australian Securities and Investments Commission (ASIC)
  • Leverage up to:
    1:500 for retail clients
  • Volatility protection
  • Negative Account Balance Policy
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