ETF Trading Strategy

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Whiddon Wealth Management, LLC2410 Westgate Blvd., Suite 108Albany, Ga. 31707T: 229-888-8308T/F: 866-888-5111

An exchange traded fund is a security that tracks an index, a commodity or a basket of

assets like an index fund, but trades like a stock on an

exchange. ETFs experience price changes throughout the

day as they are bought and sold. 

What is an ETF?

Source: Investopedia.com

An investment in Exchange Traded Funds (ETF), structured as a mutual fund or unit

investment trust, involves the risk of losing money and should be considered as

part of an overall program. An investment in ETFs involves additional

risks such as not diversified, price volatility, competitive industry pressure,

international political and economic developments, possible trading halts, and

index tracking errors.

Risks Involved with an ETF

ETF Strategy

Methodology: 1. ETFs Selection

Screening Process Find Top Performing ETFs

(Relative Strength) Find ETFs on the Uptrend

(Moving Averages)

2. ETFs Trading Strategy Trading Rules for Buy/Sell Signals Momentum

ETFs Selection

ETF UNIVERSE

TOP 4 ETFs

Top 5 of Conventional Assets

Top 5 of Currency Assets:Top 5 of Geographical

Assets:Top 5 of Non-Conventional

Assets:-Ranked by:• 3-Month Relative Strength• 20-Day Relative Strength

• 20-Day Volatility*Trendline Analysis

Price > 10 SMA

TOP 20 ETFs

RelativeStrength Analysis

*Volatility is the annualized standard deviation of daily returns

‘Simple Moving Average – SMA’A simple moving average that is calculated by adding the closing price of the security for a number of time periods and then dividing this total by the number of time periods.

Short-term averages respond quickly to changes in the price of the underlying, while long-term averages are slow to react.

ETF Trading Rules Buy Top 4 ETFs, based on momentum

strategy ETFs selection, at the beginning of the month. (If there are not 4 ETFs that meet our proprietary screening, we will shift the allocation to cash)

Sell all ETFs at the end of the month, unless an ETF remains in the Top 4 for the following month. If that is the case, hold existing position and add new positions.

Trailing stop of 8%. If the security at any point falls below 8% of it’s week ending, highest price, it is sold and the money remains in cash until the end of the month.

Example Holdings

Cash10.0%

ETF 122.5%

ETF 222.5%

ETF 322.5%

ETF 422.5%

ETF Hypothetical Model

The hypothetical portfolio contains inherent limitations: Investor/firm would have been able to purchase the securities recommended by the model and the markets were sufficiently liquid to permit all trading. Changes in these

assumptions may have a material impact on the client portfolio returns. Certain assumptions have been made for modeling purposes and are unlikely to be

realized. No representations and warranties are made as to the reasonableness of the assumptions. This information is provided for illustrative purposes only on

should not be construed as advice to buy or sell any particular security.

No strategy can guarantee profit or protect against a loss. Past performance is not indicative of future results.

Investors should consider the investment objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other important information. You can obtain a prospectus from your

financial representative. Read carefully before investing.

Glossary of TermsConventional Asset: Assets which represent different sectors of the economy (i.e. Tech, Financials, Consumer Staples, etc.)

Currency Asset: Assets that track the currency of a country or region (i.e. U.S. dollar, Euro, Yen, etc.)

Geographical Assets: Assets that concentrate investing in a specific country (i.e. Germany, India, China, etc.)

Momentum 1 : The rate of acceleration of a security's price or volume. The idea of momentum in securities is that their price is more likely to keep moving in the same direction than to change directions. In technical analysis, momentum is considered an oscillator and is used to help identify trendlines.

Moving Average 1 : An indicator frequently used in technical analysis showing the average value of a security's price over a set period. Moving averages are generally used to measure momentum and define areas of possible support and resistance.

Non-conventional Asset: Alternative assets such as commodities, gold, bonds, and inverse

Relative Strength 1 : A momentum investing technique that compares the performance of a stock, exchange-traded fund or mutual fund to that of the overall market. Relative strength calculates which investments are the strongest performers, compared to the overall market, and recommends those investments for purchase. Relative strength is a "buy high, sell higher" strategy that assumes a stock whose price has been rising will continue its upward trajectory.

Standard Deviation 1 : A historical measure of the variability of returns. If a portfolio has a high standard deviation, its returns have been volatile. A low standard deviation indicates returns have been less volatile.

Trendline Analysis 1 : Analyzing a line that is drawn over pivot highs or under pivot lows to show the prevailing direction of price. Trendlines are a visual representation of support and resistance in any time frame.

1. Source: Investopedia.com