Day Trading ETFs

You can day trade stocks and options, get into futures trading and day trade cryptocurrencies. But how about day trading ETFs? This article answers the question, can you day trade with ETFs and do day trading rules apply to intraday trading of exchange traded funds?

day trading etfs

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Can You Day Trade With ETFs?

Trading with ETFs is as simple as trading with stocks. In addition, most retail brokerages in the United States offer commission-free trading of ETFs. So in regard to day trading exchange traded funds fees, we can say that it can be done for low costs. But is trading ETFs for a living a realistic expectation?

Personally, I don’t think so, mainly because it’s non-existing diversity. Sure, there are a couple of ETFs available. But have you ever seen short interest, huge gap ups with follow-through, or clean breakouts and breakdowns?

Day trading exchange traded funds limits you right from the start. Instead of choosing the best possible stock from a universe of 8,000 different companies, you mainly focus on a handful of ETFs. So, technically, yes, it is possible to day trade ETFs, but to me, stocks and options offer the better profit potential.

When Can ETFS Be Traded?

ETFs are typically traded during regular market hours. There are also bid/ask prices available in the pre-market and post market, but most investors focus on main trading times. Basically, you can always day trade exchange traded funds, but day trading is all about trading high volatility assets.

Money is made with this volatility, and when markets don’t move, then day traders don’t make money. Therefore, it is important to focus on short term behavior, and you need a clear set of rules for the best ETF trading sytem. Typical ETFs for day trading are S&P 500 ETF $SPY, and the volatility ETF ProShares Ultra VIX Short-Term Futures ETF $UVXY.

Can You Make Money Trading ETFs?

Investors can make money trading ETFs, but even day trading 3x leveraged ETFs is not as powerful as trading high-volatile stocks with good catalysts.

During a trading day, many things can happen, but the chances that indices sharply break through recent highs or lows are relatively low. That’s because such ETFs consist of many different companies, and to make the ETF move. You need a strong overall market catalyst.

Do Day Trading Rules Apply to ETFs?

Day trading ETFs undergo the same regulations as stocks when it comes to the pattern day trader rule. The SEC protects private investors by limiting the number of day trades in 5 days to a maximum of 3 day trades.

If you trade more, you are considered a pattern day trader. Traders need a minimum of $25,000 in their account to trade as often as they like.

What are ETFs?

Exchange-traded funds (ETFs) are investment vehicles that track the performance of a particular index, sector, or asset class. As a result, they offer investors diversification and liquidity benefits that other types of investments may not provide.

ETFs are traded on exchanges like AMEX, just like stocks, allowing investors to buy and sell them by placing an order.

Types of ETFs

There are many different kinds of exchange traded funds available for investors, including those tracking:

  • Stock market indices
  • Specific sectors, such as technology
  • Commodities such as gold, silver, natural gas or oil
  • Currencies (EUR/UDS, YEN/USD)
  • Bonds, etc.

ETFs are a great form to diversify your portfolio and take advantage of the stock market. With the right strategies, ETF trading can be an effective tool for generating profits. Let’s look at some strategies for actively trading ETFs.

Exchange Traded Funds Trading Strategies – How to Day Trade ETFs

Day trading ETFs can be lucrative to make money in the stock market. However, it requires an understanding of technical, fundamental and momentum investing strategies in order to be successful.

Technical Analysis Strategies for Day Trading Exchange Traded Funds

Technical analysis involves using chart patterns and indicators such as moving averages, support/resistance levels, trendlines and volume to identify potential entry and exit points for trades.

Traders use these tools to analyze price movements over time to predict future trends. For example, suppose a trader notices that a certain ETF has been trending up for several days with increasing volume, and now the stock consolidates on a high level with low volume.

In that case, they may decide to enter into a long position on the assumption that it will continue its upward trend.

Fundamental Analysis Strategies for Actively Trading ETFs

Fundamental analysis is used by traders who want to gain insight into the underlying value of an asset or security. This type of analysis looks at factors such as company fundamentals (e.g., earnings reports), macroeconomic data (e.g., GDP growth) and industry trends (e.g., new products).

However, for intraday trading of ETFs, the fundamental data of a stock is not that helpful since a basket of stocks is inside the ETF.

Tips for Successful Day Trading With ETFs

Day trading with ETFs can be a way to make money in the stock market. However, it is important to understand the risks and strategies before entering any trades. Here are some tips for successful day trading with ETFs:

  • Research Your Investments Thoroughly Before Entering a Trade
  • Make sure you understand how they work, what their underlying assets are, and whether or not they fit your investment goals
  • Check out the historical performance of each ETF so that you can get an idea of its potential future returns.

Use Stop Losses to Limit Risk Exposure

Stop losses are orders placed on stocks that automatically sell if the price falls below a specific price level of the ETF. This helps limit risk exposure by preventing significant losses from occurring due to sudden drops in price or other unforeseen events.

When setting up stop losses for day trading with ETFs, it’s essential to set them at levels where you would still make a profit even if prices fall significantly lower than expected.

Leverage allows traders to increase their buying power without putting up additional capital upfront, meaning that investors can earn more significant profits by taking advantage of leverage when day trading with ETFs. However, it is important to remember that leveraging increases risk as well.

Common Mistakes to Avoid When Day Trading With ETFs

When day trading with ETFs, traders should avoid several common mistakes. Not doing enough research before entering a trade is one of the most serious mistakes to avoid.

Not having an exit strategy in place is another mistake that many traders make when day trading with ETFs. An exit strategy allows you to plan ahead for how you will manage your positions if they start going against you and helps protect your capital from large losses due to market volatility.

In addition, having a well-defined plan for exiting trades can help minimize losses and maximize profits when markets move unexpectedly.

Finally, overleveraging positions can lead to large losses if the market moves against them. That’s the case for day trading stocks but also if you day trade ETFs. Leverage amplifies gains and losses, so it is important not to use too much leverage on any single position. This could result in significant financial loss should the market turn against you quickly.

Day Trading Exchange Traded Funds – Conclusion

By understanding what ETFs are, learning different strategies for day trading them, and following tips for success when day trading ETFs, a knowledgeable investor can increase the chances of success.

The trading volume of ETFs is typically high, while volatility is low with most ETFs. Therefore it is important to test the efficiency of ETF trading strategies first and to see if it fits your trading style. The best ETF trading strategies are only great if it can unlock great returns.

Financial instruments such as stocks, mutual funds, options, and futures contracts can be good alternatives to ETFs.

About the Author

Alexander is the founder of and has 20 years of experience in the financial markets. He aims to make trading and investing easy to understand for everybody and has been quoted on Benzinga, Business Insider, Investors Business Daily, Newsweek, GOBankingRates,, and other major publications.