By: GetItRiight

GetItRiight — Fri, 03 Mar 2017 21:52:26 +0000

While there is no doubt in my mind about the dangers of holding leveraged ETFs for a longer time frame than 1 week or 2, I managed to pull off multi week swing trades using leveraged ETFs, even when they went against my entry position. The key is to manage that position by averaging down at support levels and take emotion out of that trade.
First of these trades started in mid November last year during the initial miner selloff, when a bounce was looking likely. I started layering in JNUG at key points. If it went lower and my loss went beyond 10%, I added another tranche. I kept doing that until I got to the maximum amount I had allocated to that trade. My average for JNUG was around 6. The low point was 3.77 on Dec 20. I held the position until Jan 4 when I sold at 6.8. Had I held longer, I could have gotten to around 12 on JNUG, but was happy with the outcome.
The second trade was with JDST, with the same layering strategy from mid January, to which I kept adding until February. I had an average of 21 and sold today at 22.
Of course it was tough seeing JDST tumbling to 11.75 low, but the charts kept showing price going up on negative divergences and declining volume. Props to joefriday for staying the course on the same trade.
I don’t advocate this method, but it can work. What I took away from these 2 trades is to time my entries better and wait for overbought or oversold conditions (if possible on the daily) to accompany divergences, although, as is the case with XBI, that also could take long to play out.

Comments on: The Pros & Cons Of Trading Leveraged ETFs vs. Non-Leveraged ETFs

By: GetItRiight