Three methods are considered here, one for the long-term investor who does not care to mess with investments once purchased, the others for people a bit more into trading.

They were selected after applying easy calculations and using info readily available on the web. First, one can pick the 25 or so better performing exchange traded funds which also have a several year history. Then take the average annual return of each, divide it by the fund's expense ratio, and multiply this result by the number one, less the decimal fraction representing the ETF's greatest downturn in the past ten years (which generally occurred between 9/2/08 and 3/15/09). Of the original list of 25-30 that already had decent returns, the five shown here had the highest product from these math operations and, to me, the best historical profits over the prior decade for their costs and risks.

At the table are the suggested ETFs, but if one prefers others that also have good long-term records, low fees, and relatively low downside in a bear market compared with their overall returns, switching any of these for those others would probably work out well too.

In the first approach, one simply buys a roughly equal amount of each of the five ETFs when the market is down significantly, say 20% or more (which tends to occur every few years), and holds until the assets are needed, perhaps ten, twenty, thirty, or forty years later. A buy and hold approach with an equal $10,000 investment ($50,000 total) in these exchange traded funds ten years earlier would as of 8/31/14 be worth $156,070.

The greater the frequency of the security's swings, the better, so long as there is reason for confidence that it will sooner or later, preferably sooner, be up enough to be sold once again. In most cases, there can be more confidence of this sort with exchange traded funds than is true for individual stocks (for which bad news can be ruinous). With the ETFs cited above, this strategy seems likely to be especially efficacious for IJH and QQQ, since they have tended to trade up and down multiple times in a year. With QQQ, for instance, there is often a quarterly drop after the asset is ex-dividend. Then the price rises more than 5% before the next such regular drop. (While that happy pattern has been true for awhile, there is no guarantee it will persist in future.)

If one gets an average net 5% gain four times a year, that works out to about a 21% return, not counting any dividends. More so than not, though, when an asset's price is noticed to be up enough to sell, it averages a little higher than the over 5% minimum for a sale. If that average net gain per round trip (a buy followed by a sale of the same shares) is, say, 7%, and occurs four or more times a year, the annualized performance works out to over 31%.

This is potentially the riskiest of the three approaches considered here, however, for one can never tell in advance how long the asset may go down before it heads back up enough to sell. Thus, it is helpful to keep one's investment amounts relatively low and one's initial cash reserves high. Later, once profitable sales have increased cash reserves further, it is possible to more safely raise per investment amounts.

This method tends to increase the number of shares of each ETF used and to lower the average cost per share. Shares sold off when the core holdings are higher than the 5% over threshold are being redeemed at a profit, their proceeds then being added to the money market account holdings, while shares bought when the core holdings are significantly below the 5% under threshold are clearly being obtained at a lower price. The system assures that one buys low and sells high. One is gaining not simply through the assets themselves gradually going higher in price, as is the case with the first, or buy-and-hold, approach, but also through capitalizing on the volatility of the individual assets selected for one's ETF portfolio.

For a handy reference to this latter technique's ins and outs, I can recommend the book How To Make $1,000,000 in the Stock Market Automatically! by Robert Lichello. Despite the obvious hype in that title and though the book was written when there were few if any financial instruments like exchange traded funds, this is a fun, useful little guide with practical applications to ETF investing.

Since profitable short-term trading has tax consequences, the cited trading approaches are most appropriate for IRAs or 401k investments.

Good luck with your own exchange traded fund researches, techniques development, and investing returns!