Home > management, Markets, trading > Profitable ETF Trading Strategies: monitoring global markets

Profitable ETF Trading Strategies: monitoring global markets


One of the phenomena of a truly global market is the interconnectedness of everything. A good example for situational trader is the recent episode of swine flu that has many people worrying about a worldwide pandemic.

Because of the concentration of confirmed cases in Mexico, the first place we could look to find a potential weakness at the open on Monday morning would be in the Mexican ETF, symbol: EWW. In fact what we saw was a gap down opening of eight percent, followed by weakness throughout the day to close down 9 1/2% for the  session.

The next place that we can look is to expand our focus to the geographic region, by looking at the ETF for Latin America, symbol: ILF. As we might have suspected, Latin America was down much greater than the rest of the world also. So, we can see the connection between countries and regions very clearly here.

Mexico and Latin America are both members of what is considered to be emerging markets. This collection of countries is represented by the ETF symbol: EEM. This ETF was also down much more than the rest of the world today. What contributes to the potential weakness in emerging markets is perhaps the relatively less resourced national healthcare systems which may make emerging market countries more vulnerable to a flu epidemic than the mature first and second world countries.

Taken together, these ETF’s show us how macro economic events in the news unfold across country and regional boundaries and can help us confirm the hypothesis of tradable ideas that appear every day in the news.

By developing trading scenario ideas, the short-term trader is able to assemble a bundle of ETF’s that serve both as tradable vehicles and as research instruments. By having all of these on the trading screen it is possible to see the idea of the tradeunfold in real time right before your eyes. You can then select which of the targets is moving the most in your preferred direction and you can turn your research idea into a tradable vehicle.

By monitoring a standard set of international, regional, country and specialty ETF’s, the short-term trader is able to monitor world events and take advantage of trends in the global market. 

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