Friday, December 30, 2016

Shorting $JNUG the Junior Miners ETF

What a year, huh?  A lot of volatility, crazy happenings around the election and overall a 10% gain in the SPY.  So, what did I do for myself?  Nothing good.  As with every year, I think I can trade my way to profits, and that hasn't worked.  Maybe it works for other people, but never has for me.

So, I am back to trying a sensible long term strategy.  This time, revisiting this strategy of shorting the leveraged ETFs.  I think I spread myself too thin last time, a lot of different ETFs, and trying to guess market direction, instead of using the daily rebalancing of the 3X ETFs in my favor.

So, I am now short $JNUG, the Junior miners 3X ETF.  I am offsetting this with a long position in $GDXJ, the single junior miners ETF.  I am using about a 2.6% ratio rather a flat 3.0 as would be indicated.  I'll let you know how it works. 

From my observation, $JNUG is one of the most volatile of the  #X ETFs, and is also available to short on occasion.  I got some.  We'll see how it works.

Thanks for reading, I'll let you know how it works out.

Wednesday, February 24, 2016

Leveraging the Home Builders

I shorted up two more leveraged 3X ETFs yesterday the Direxion Bull and Bear ETFs, $NAIL and $CLAW.   Like most of the things I trade, I have no idea if these are going up, down or sideways, I am in the trade for the decaying effects of daily rebalancing.

A word on these ETFs.  They aren't really the best idea from one standpoint, in that they are very illiquid and have pretty big bid and ask spreads.  If you move in out of them a lot, the spread will be very damaging.  Therefore, this really needs to be a long term play.

I hope to pretty much never cover this pair, and have them both decay to practically zero.  But I don't know if that will happen.  Life gets in the way sometimes.

I'm thinking of converting this strategy to a pay service through MarketFy.  Of course, it would be helpful to have some positive history.

Good luck and good trading.  The usual disclaimer applies.

Monday, February 22, 2016

A New Start

A few weeks ago I restarted the concept of the Leveraged ETF shortlist.   This time, instead of randomly picking assorted ETFs, I shorted pairs of opposite ETFs.  Things like $NUGT, which is a bull 3X Gold miners ETF, and it's opposite Bear ETF, $DUST.

I will say I was surprised that one day I was able to short $DUST, I hadn't been able to for a long while.  So when it was available, I grabbed it. 

So, as of today, I have 3 pairs, $DUST and $NUGT, $SQQQ and $TQQQ and $VXX and $XIV.  I don't want to have too many, because of the commission cost, but not too few because this strategy isn't flawless.

How can it fail?  If one of the ETFs in a pair falls too much.  I can explain this more some other time.  For now, just know that the best thing to happen is that the funds are volatile and fall equally over time.  As of now, all these pairs are winners.  We will see if that holds up. 

Happy trading.

Saturday, January 9, 2016

Six Month Review

It's been a while since I posted here.  I had abandoned my strategy, but I wanted to go back and see what would have happened if I hadnt.  Here's a look at the stock price when I did my initial short many months ago and where it would be at Friday's close, adjusted for stock splits as appropriate.

As you can see from the table below, the strategy was pretty much a disaster  The negative impacts of the 3X leveraging were more than offset by declines in the market, particularly in the Russia and China markets  $NUGT was a huge winner, but most everything else did badly  I would probably need more time, or to include more bearish positions.

Initial ShortCurrent Price
NUGT                  9.60                          2.85                 
BIS                29.13                        35.73                
TZA                  9.42                        14.18                 
VIXM                53.67                        59.70                
RUSS                32.68                        48.59               
CORN                22.99                        21.08               
FAZ                10.89                        12.70                 
UVXY                36.25                        42.81                
FXP                28.22                        51.87               
XIV                47.34                        20.43