ETF Dollar Cost Averaging
One of the often cited advantages of exchange traded funds (ETFs) over mutual funds is that you can buy and sell them whenever the market is open. Still, most investors, in my opinion, would be better off not engaging in day trading with ETFs.
While I think it can sometimes make sense to scoop up some shares during a significant dip in the market, I believe it is generally better to just continually buy relatively small amounts of shares over long periods of times. For me this has one major advantage in that I'm never in the position of having plunked down a large sum of money on something the day before it has a big dip. In the long run, such dips are negligible, but they, for lack of a better phrase, bum me out.
The problem with small, frequent purchases of ETFs is that you run the risk of paying too much in broker fees per transaction. One way around this is to use a service like ShareBuilder (yes I'm a customer, but I don't get anything from endorsing them). ShareBuilder allows you to set up regularly scheduled stock purchase orders for $4 per trade. These orders don't happen in real-time, but rather on a weekly or monthly basis. This is why the per transaction fee is so low. And if you find that you're doing many transactions per month, you can sign up for a plan with a flat monthly fee that gives you a dozen trades bringing the per transaction costs closer to $2.
ShareBuilder also makes it easy and cost-effective to rebalance your ETF holdings.