What is the EEM ETF?
Ishares MSCI Emerging Markets ETF is an Exchange-traded fund.
The EEM ETF seeks to mirror results that correspond to the price and yield performance of an index composed of large and mid cap emerging market equities. The Index is designed to measure equity market performance in the global emerging markets. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. The Fund may invest in securities of non-United States issuers that may trade in non-United States markets.
Why should I trade an Emerging market ETF?
Many investors use emerging markets to diversify their portfolio. This allows the investor to spread his wealth across many markets. It is a good idea to diversify in trading as well.
Can a trader trade EEM Options?
When trading options some things are just not worth it. Options have high volatility. A trader might be up 20% one second and down 50% the next when trading options. This can be fool’s gold. The main problem with some options is the difference in the bid/ask spread. If a stock or ETF does not have much volume usually the options bid/ask is so wide that just a purchase of that option would put the trader at more that 10% loss. When the trader goes to sell they would lose another 10% on that trade. A trader would have to make 21% to just break even. The EEM ETF has enough volume that the difference in the bid/ask makes it ok to use to trade options.
Trend Following EEM
The EEM ETF is an ETF to follow with your long-term trend following strategy. Historically the ETF has performed ok when used in a long-term trend following system. Since 2008 it has been in a sideways trend.
As you can see with the above chart the EEM ETF is an ok index to use when a trader is trend following long-term. It really has not been the best in since 2008. With trend following it really does not matter if a stock or ETF is going up or down it just needs to move in one direction for an extended period of time.