Foreign vs. domestic stock ETFs

TIP: To view these charts in better detail, you may want to open them in another window. The above charts were saved in a single jpg file.

Note that in the above three charts, representing some of the most liquid and commonly-traded International stock ETF's, the chart patterns are nearly identical. If I didn't label them on my charts, I could hardly tell the difference. These charts are of very diverse areas of the world: Emerging markets, Europe, Australasia, China. If I posted the U.S. stock ETF charts (SPY, DIA, QQQ, UWM, etc.), they would appear nearly identical.

The point of this post is simply that trading a multiplicity of stock ETFs from around the world is really quite useless, because all appear similar and move nearly in lockstep with each other. Stocks around the world tend to trade in very mirror-like patterns, with relatively small differences. I have noticed this pattern perpetuate itself time and again, and I finally realized that trading stocks, whether in Japan, Germany, Hong Kong, or New York, is still still trading stocks.

I suggest trading the largest and most liquid stock index ETFs, so you can enter and exit positions with good fills, tight spreads, and minimal slippage. Whether those ETFs are U.S., European, or Asian ones is largely irrelevant. However, U.S. financial markets are among -- if not THE -- most liquid in the world, so I prefer to use them. If I were living in another part of the world, I might trade using their indexes. However, this would only be because of the time zone and the need to trade at an hour when those markets have the greatest liquidity.

One caveat: I trade ONLY ETF's -- no individual stocks -- and they are all based upon indexes for those parts of the world.