5 Best ETF Trading Strategies for Beginners

In this piece, we will take a look at the 5 best ETF trading strategies for beginners. If you want to go through our introduction to ETFs and the stock market in general, then take a look at the 10 Best ETF Trading Strategies for Beginners.

5. Hedging

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A hedging strategy entails the purchase or sale of an investment security to mitigate the potential decline in the value of another asset or security. For instance, an investor with a substantial long-term position in stocks might engage in short selling of a stock ETF or acquire inverse ETFs. This approach aims to generate a positive return if the value of the long stock positions decreases. In some cases, beginners may find it necessary to hedge against downside risk in a sizable portfolio, especially one acquired through inheritance.

Alternative forms of a hedging strategy may involve acquiring specific investments to offset the risks associated with a particular economic scenario. For example, an investor might opt to include ETFs designed for inflation, such as a commodity ETF, which have historically demonstrated better performance compared to the broader market during periods of high and increasing inflation.