17 ETFs For Day Traders

by on July 13, 2012 | Updated July 9, 2014 | ETFs Mentioned:

Investors of all walks have embraced ETFs as the investment vehicle of choice when it comes to accessing virtually any asset class in the global market. Persistent innovation in the exchange-traded universe has further propelled ETPs at the forefront of many active traders’ radar screens given the diverse, and growing, lineup of liquid financial instruments. Aside from the inherent transparency and diversification benefits associated with exchange-traded funds, traders have also come to embrace the liquid and cost-efficient nature of these tools [see ETF Technical Trading FAQ].

As such, day traders have embraced these financial instruments as viable tools for achieving cheap and incredibly liquid exposure toFile:NY stock exchange traders floor LC-U9-10548-6.jpg any corner of the market. Whether its buying into a leveraged NASDAQ fund before Apple reports earnings in anticipation of a blowout quarter or selling gold after pessimistic FOMC minutes, ETFs have rightly earned the respect of many seasoned day traders [see also How to Play Schiff’s $5,000 Gold Prediction].

Below we cover 17 of the 100 Most Liquid ETFs by trading volume, highlighting instances when each one might come in handy for those looking to make a short-term bet:

17. Industrial Select Sector SPDR (XLI)

This offering from State Street may come in handy for those looking to tap into the domestic industrials sector right before (or after) relevant economic data is released. Be sure to have this ETF on your radar screen the first business day after the end of every month as ISM manufacturing data hits the street; this figure is compiled based on a survey of purchasing managers in the U.S. manufacturing industry.

16. S&P 500 VIX Short-Term Futures ETN (VXX)

For those that thrive on big swings in price, this ETN could be your dream tool. VXX offers exposure to volatility futures, and as such it can be utilized as a hedging tool in conjunction with other positions, or as a standalone trading instrument. Keep your eyes on this ETN every Thursday as weekly unemployment data comes out on the home front; this figure reflects the number of people who have filed for unemployment benefits for the first time during the past week, offering frequent insights into the health of the labor market.

15. United States Natural Gas Fund (UNG)

Commodity traders can take advantage of this notoriously volatile ETF every week as Natural Gas storage data comes out. This report hits the street every Thursday and profiles the number of cubic feet of fuel held during the past week, giving investors and traders alike further insights into supply and demand conditions going forward [see 25 Ways To Invest In Natural Gas].

14. DB USD Index Bullish (UUP)

Gaining exposure to the U.S. dollar index may come in handy for those looking to make a bet on inflation expectations before (or after) CPI is released. This ETP can be a useful tool to take advantage of when U.S. consumer price index data hits Wall Street about 15 days after the end of each month; this statistic compiles the change in prices for a basket of common goods and services purchased by consumers, note that Core CPI data excludes food and energy [see also King Dollar ETFdb Portfolio].

13. Ultra DJ-UBS Crude Oil (UCO)

UCO is a Futures-Based product that offers 2x leveraged exposure to the price of crude oil. Crude oil inventories data can surely give this ETP fundamental reasons to jump in either direction as traders react to inventory data from the past week every Wednesday morning [see also 25 Ways To Invest In Crude Oil].

12. SPDR S&P Retail ETF (XRT)

Traders and investors alike turn their attention to the consumer discretionary sector every month as U.S. retail sales data is released. XRT is by far the most liquid tool in the shed for those looking to focus specifically on the domestic retail sector; this ETF comes in handy for tapping into the market before a big name retailer reports quarterly earnings or for making a play in anticipation of a better-than-expected retail sales report.

11. MSCI Japan Index Fund (EWJ)

This ETF comes in handy for those looking to make a bet on Japanese economic growth and inflation expectations following the monthly Bank of Japan policy meeting and interest rate decision. The BoJ releases its interest rate decision along with a commentary on economic developments inside and outside the country in the middle of every month, bringing the spotlight onto Japanese equity markets and likewise EWJ.

10. MSCI Germany Index Fund (EWG)

German equities, and EWG, come into focus for a lot of traders each and every month following the release of the latest German inflation data, helping to shed light on the health of arguably the most important Euro zone member nation. As the largest Euro zone economy, German CPI has a major influence on the regions inflation as well as actions taken by the European Central Bank [see Euro Free Europe ETFdb Portfolio].

9. UltraShort Euro ETF (EUO)

This inverse 2x leveraged currency ETF can be a powerful tool for those willing to take a bet as to which way the Euro will trade versus the U.S. dollar in the currency market. EUO can serve as a viable trading tool on a day-to-day basis or as a betting instrument before relevant economic releases such as the European Central Bank interest rate announcement and press conferences.

8. FTSE China 25 Index Fund (FXI)

This ETF is less than ideal for those looking to establish well-diversified exposure to Chinese equities over the long-haul given its shallow, top-heavy portfolio. However, when it comes to day trading China’s equity market, FXI is by far the best tool for the job; this ETF also has an active options market, allowing traders to employ more sophisticated strategies as well [see Why You Should Sell FXI, Buy GXC].

7. SPDR Homebuilders ETF (XHB)

Whether you’re following new home sales, housing starts, building permits, or existing home sales data releases, XHB is the most popular ETF that offers access to the U.S. home building industry. Each of the above mentioned figures are released on a monthly basis and offer backward-looking insights into the health of the domestic real estate market.

6. Barclays 20 Year Treasury Bond Fund (TLT)

This is the most liquid fixed income instrument on the market, and as such, many day traders embrace TLT when it comes time to flee to the safe havens. TLT tracks long-term U.S. Treasuries which makes it an ideal fund to buy in anticipation of equity market turbulence, or take on a short position if buying euphoria is likely to sweep over Wall Street [see also How To Play A Treasury Bubble With ETFs].

5. MSCI Australia Index Fund (EWA)

Australia’s economy holds an important place on the global stage and it shouldn’t be much of a surprise that this Australian equity ETF is one of the most liquid funds in the exchange-traded universe. Whether its making a bet before Australia’s quarterly GDP report or central bank rate decision, EWA is the most popular tool for achieving exposure to this prosperous island-nation.

4. Emerging Markets ETF (VWO)

When it comes to increasing risk exposure in times of equity market euphoria, VWO can be the perfect tool as it offers cheap and liquid access to the popular MSCI Emerging Markets Index. In addition to serving as a tactical “risk on” tool, VWO also doubles as a great core building block thanks to its competitive 0.20% expense ratio and the fact that it’s available commission free to Firstrade, TD Ameritrade, and Vanguard account holders.

3. DB Commodity Index Tracking Fund (DBC)

More and more traders and investors are tapping into the commodity asset class thanks to the evolution of the ETF industry which has brought forth countless tools that make it easy to tap into various futures markets. DBC is the most popular instrument available that offers broad, futures-based exposure to 14 of the most heavily-traded and important physical commodities in the world.

2. SPDR Gold Trust (GLD)

Gold is without a doubt one of the most favorite assets among active traders as it holds appeal as both a safe haven and hedge against inflation while also serving as an indicator of fear and uncertainty in the global market. GLD is the most popular physically-backed gold ETF on the market, offering tremendous liquidity and an active options market for more sophisticated traders [see Seven Reasons To Hate Gold As An Investment].

1. SPDR S&P 500 ETF (SPY)

SPY takes home the cake when it comes to pleasing even the most critical of day traders. This is by far the biggest and most popular ETF in the world, period; SPY offers unparalleled intraday liquidity and one of the most active options markets on Wall Street, serving up countless opportunities to employ even the most sophisticated strategies on a  tick-by-tick basis [see also 5 Tips ETF Traders Must Know].

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Disclosure: No positions at time of writing.