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.