Thoughts on ETF

I've been mentioning for a good minute now that I will consider ETF option trading. However, as I come close to the end of my ongoing trade on XLE, I want to look at it historically and express my thoughts.

XLE

When I first rolled up my sleeves to look at $XLE for 30-20-14 days, I never once considered to look at its data historically from previous years. Today, I decided to take a look at it, for its lifetime since 1999 and it surprised me to say the least. Let's see why

In the screenshot of XLE chart, we have the chart itself, my current channel defined, the RSI, and the MACD (the indicators are just here for me because I’ll use them on Monday). My focus is not on technical analyses, but rather observing how steady the price of XLE has been, its growth has been gradual rather than explosive throughout the years. This to me indicates security, as a long term investment. Now, of course, there will be times when XLE loses value and dips in price – such was the case in 2008 and 2020, both dips heavily influenced by external factors. In 2008-2009 we saw the great recession, hence a noticeable dip. Later on, we see another low in 2020, this being heavily affected by covid. However, aside from those two major events, XLE has been in great shape from the beginning in terms of its steadiness. XLE is an ETF, but it tracks an index (the Energy Select Sector Index)

Now, there are hundreds of ETFs to be explored an analyzed. However, I was watching a video about millionaires and index funds was something that was mentioned a lot by several people in the video. This alone made me think of XLE, and wanted to see its growth overtime. Overall, I feel confident in trading ETFs, such has been the case of XLE, and I've had a good time doing so. Nonetheless, it has allowed me to allocate separate investments for ETFs as they will bear fruit with a high degree of confidence.

I have unintentionally been essentially trading an index fund, but knowing that they’re secure investments long term, it allows me to want to continue this if it works for me. Now of course, I’ll love the variety of everything but ETFs is something that may remain a constant for me.

Overall thoughts

I think I will definitely be looking at ETFs not only for options trading but also for long term investments. It’s also made me realize that while my current approach and analysis before entering a contract is working so far, I’d still would like to look at historical data to understand how much outside factors have an affect on them.