3 Reasons Every Trader Should Master Trading This ETF
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– ETF Watchlist –
As of this current moment, the market appears to be in full breakout mode. Tech and communication services led the way in yesterday’s session, followed by consumer discretionary nipping on their heels. These are the three sectors we would expect to see at the top of the performance list should the market continue to roll higher, which seems to be the case here.
With the debt ceiling debate not coming to a close for at least another week, the “buy the rumor” portion of this waiting game seems to be in full effect. Couple this with the fact that FOMO is now making an appearance to this party as those who were not in on the initial move now pile into the market, hoping to grab their piece of the action.
Since this rally is being led by tech the stocks, we think it is again a good time to highlight a tech-heavy ETF in order to take advantage of the opportunity the market is giving us. This means we will once again direct our attention to the Invesco QQQ Trust Series I (QQQ).
Invesco QQQ Trust Series I (QQQ)
Why do we love the Q’s? Well, there are a couple reasons, let’s take a look at some of the most common to better highlight why this should be an ETF you are always keeping an eye, especially if you are a trader just starting out or one that likes a more simplified style of options trading.
Reason one, this is one of the most popular tickers out there to trade. A wide number of traders from various levels of experience trade this ETF on a near daily basis. Because of the vast number of traders that choose this as their stock of choice, many investors are looking at the same patterns and setups, making them an almost self-fulfilling prophecy.
Another reason, due to the fact that there are so many traders that are trading this ETF, it has great liquidity. This means that there is a narrow spread between the bid and ask, giving better fills on orders placed. This can make a big difference on your bottomline. Stocks and ETFs that have large spreads due to low liquidity automatically put you at a disadvantage. If volume on the stock or ETF is low, it doesn’t really matter whether or not your position is in the green, if there is no one on the other end to pick up the tab, you’ll more than likely be stuck with the bill as you watch Theta eat your contract alive.
The third and final reason is because we are looking for both information tech and communication services to tag team this rally, QQQ gives you a good mix of stocks in each of these segmented categories under the tech umbrella.
Technically speaking, stocks like Apple (AAPL), Microsoft (MSFT), and Nvidia (NVDA) are under the “tech” specific center, while stocks like Meta (META) and Google (GOOGL) are housed under communication services. You may think this is splitting hairs and in some respects it is.
Be sure to check out our full video breakdown below for more of my insights into this market, as well as what my students and I are looking at for any trades ahead.
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