How to Trade: ETF Swing Trading Signals

How to Trade: ETF Swing Trading Signals

August 25, 2018 0 By Jeremy




ETF Swing Trading Strategies

I like the idea of trading ETFs, which is why I spend a lot of time researching for systems that generate ETF swing trading signals.  Like the ETF Swing Trading strategy I wrote about earlier, there are a number of ways to capitalize on short-term movements of highly liquid ETFs.

In this post I am going to outline the rules and steps in a few of the screens I am currently running in TC2000 to generate trade ideas.

Where Can you Get System Ideas?

I have found that one of the best ways to generate system ideas is from books written by well known rules-based traders.  For example, Larry Connors has a number of books that are 100% dedicated to using signals and trading rules.

Psychological Considerations

Before I list a number of those books, I want to touch on something first.  No matter what system you use to trade, that system MUST be aligned with your market beliefs and psychological makeup.  No system is going to perform well if you can’t trade it because you don’t believe in it or simply can’t trade it because you disagree with some aspect of it.

To work on that, the first two resource I recommend is Van Tharp’s book Super Trader and Mark Douglas’s  Trading in the Zone:


Both of these books will give you a strong overview of how to work through the psychological aspects of trading.  That is more important than any trading system out there.

ETF System Trading Books

The books that follow are a number of the ones I have used to generate the ETF Swing Trading signals I use in my own trading.  For the most part, I have used the foundations of the authors systems and adapted them to what works best for me.  More on those systems below, but first the books:




ETF Swing Trading Signals – The Systems

If you have been reading this site for a while now, you know that I use TC2000 as my charting platform.  I am able to set up a number of scans against a watchlist of ETFs with high liquidity and good trading dynamics.  Here is a list of those ETF Swing Trading Signals that I have found to work for me.

ETF Swing Trading System

  1. ETF traded must be in an uptrend: must be trading above its 200 day simple moving average and has been heading higher over the past 50 days.
  2. ETF traded must be in an uptrend: must be trading above its 50 day simple moving average and has been heading higher over the past 30 days.
  3. The ETF must trade at least 250,000 shares per day.
  4. The 2-period Wilder’s RSI [RSI(2)] of the ETF closes below 5.
  5. Set position size as 1.0% of account with a 7% max loss.
  6. Set stop at 7% max loss.
  7. Buy the ETF at the open on the next day.
  8. Hold the ETF until the RSI(2) closes above 90.
  9. Exit at the open following a previous day close of RSI(2) > 90.

ETF High Low Trading Strategy

  1. ETF traded must be in an uptrend: must be trading above its 200 day simple moving average and has been heading higher over the past 50 days.
  2. ETF must also be trading below the 5 day simple moving average.
  3. The ETF must have had three consecutive days of lower lows and lower highs (TC2000 scan = H2 < H3 AND L2 < L3 AND H1 < H2 AND L1 < L2 AND H < H1 AND L < L1).
  4. Set position size as 1.0% of account with a 7% max loss.
  5. Set stop at 7% max loss.
  6. Buy at the open next day following that third day of lower lows and lower highs.
  7. Exit next day open when the ETF closes above the 5 day simple moving average.

ETF 4-Day RSI 25 Strategy

  1. ETF traded must be in an uptrend: must be trading above its 200 day simple moving average and has been heading higher over the past 50 days.
  2. ETF RSI(4) closes below 25 at the close.
  3. Set position size as 1.0% of account with a 7% max loss.
  4. Set stop at 7% max loss.
  5. Buy a second lot is signal is generated on next day as well. No more than two successive buys.
  6. Exit with RSI(4) closes > 55

Keep in mind, that for most of these systems, there may not be trades that are generated every day.  In fact, there can be long stretches where signals are not generated at all.  That is why I also supplement these ETF systems with trading signals such as my Donchian system or the Bollinger Band Breakout.

I am now on the hunt for some system that can be used when the market is in a downtrend.  As you will have noticed, all of these are long only systems and I want one that trades inverse ETFs when the market is turning down.  I need to research that.

If you have any systems that trade inverse ETFs when the market is in a downtrend, then please use the comments below to let me know! 

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Featured Image: Half Way To The Top by Bill Burris