Index Fund Trading can be one of the most profitable...or most costly exercises you will ever do.

While trading a basket of Stocks has it's advantages, such as removing the risk of any single company you own Stock in going bust and taking all of your money with it, Indexes tend to be highly volatile, especially the smaller ones.

Using technical analysis and swing trading strategies for your index fund trading can vastly improve your results and profits if you know how to analyse Stock trends and patterns.

The S&P 500 is probably one of the Worlds best known indexes, and it has a long history of strong trends that have made and lost traders fortunes over the years.

By trading a managed fund that tracks the Index, we can participate in the movements of the market.

The easiest way to do this is to simply buy a managed fund like the Vanguard 500 Index fund. This works fine when the trend is up, but what about when the trend is heading in the other direction?

There are several funds that trade inversely to this index. One of these can be used to trade the downside when prices are falling, as they did for a long period of time as the market came off the 2000 top.

The problem with these funds is that you usually have no leverage. This is why many traders move on to Index Fund Trading through derivatives as an alternative to simply buying a Mutual fund.

If you and your adviser believe that some type if derivative is appropriate for you, then you will gain tremendous leverage to movements in the underlying market.

Of course, if you have no idea how to trade, this leverage is a two edged sword.

Index Fund Trading can be very profitable, but you have to do it right.

This is why learning how to trade profitably, using technical analysis, is far more important than the vehicle or fund you use.

Many investors believe that technical analysis is of no use to them. They consider it to be far too unreliable.

It can be for an inexperienced user, but a basic understanding of technical analysis principles would have saved many traders and investors many thousands or millions of dollars during the recent bear market.

The great trader WD Gann said it doesn't take very long to make a lot of money trading Commodities (or Stocks for that matter), but it does take a long time to get ready to make a profit.

Getting ready involves study and a little bit of work - unfortunately, there is no other way if you want to make significant profits trading Indexes or Stocks. apex trader funding coupon code

So, lets have a look at an index and how we would trade it.

I have used the S&P 500 in this example, as it is a big liquid market with lots of participants, however this trading method applies equally to any other Index or Stock.

Please Click Here to go to the chart for this article. Once you have it printed out or studied it and have it open in a new window, please come back here and we will get underway.

Index Fund trading for investors is best carried out using weekly charts and swing trading strategies as these tend to show strong, consistent trends, minimizing switching fees and/or Brokerage expenses.

For an in depth discussion of swing trading strategies go to StockTradingreview.com

By placing two simple moving averages on this weekly chart, Index fund traders are given clear buy and sell signals for their entries and exits into the S&P 500 Index Fund of their choice, or some other form of leveraged exposure to the Index.

After a short period of indecision at the start of this chart, the short term moving average crossed down through the longer term one, indicating a switch out of any S&P Index funds was warranted, and for more aggressive investors, possibly a move into one of the many funds that trades inversely to this Index - I.E. a fund that makes a profit when the Index falls.