The summer of 2009 is about to become a memory as we get back to the daily grind. You might be considering wading back into the markets and invest in a few exchange traded funds (ETFs), too, but do you have a strategy?

Investors are hoping that the next season will bring as much growth as the summer months did. There are still those naysayers who are fearful that the market is simply going to go through another correction.

But the fact is that major stock indexes are up 50% from March 9 lows; the S&P 500 is up 52% and the Russell 2000 small-stock index has taken off almost 69% from its March low. With these numbers, and more in mind the economy is feeling healthy again and investors are becoming interested in the markets. Right now, the trend is up and if you’re going to get in, you need a plan.

The importance of having a strategy is more evident than ever, especially if you were badly burned in the Great Recession. Even if you do have one, it’s always worth reassessing, reports Tom Petruno for The Los Angeles Times reports.

Our strategy is to watch the 200 day-moving-average. When a position crosses that mark, it’s a buy signal. When it dips below or 8% off the recent high, it’s a sell signal. There are several benefits to having a strategy and the discipline to use it:

• By using a strategy the emotional unease is cut out and there is no need to question your decisions. The markets are your guide.
• You give yourself the opportunity to participate in any potential long-term uptrends; you also help limit your losses on the downside.

You can read more about our strategy in The ETF Trend Following Playbook, which is now available for order on Amazon and Barnes & Noble!

For more stories about trend following, visit our trend following category.

Tags: ETF Book, Russell 2000, S&P 500, Trend Following