Today was a crazy day for the natural gaz ETF UGAZ. I'm bringing this chart from a longer time frame so you can see the magnitude of the last days move.
What I've learned from this trade is a lot. I've done several mistakes so far. I'm going to some them up.
1. First of all I played it too hard leaving me too little margin for errors and no buying power if the move should go further against me.
2. I didn't pay attention to the fact that the inverse ETF DGAZ and the straight ETF UGAZ was trading at 10% percentage points difference. I went heavily into long DGAZ and even covered some of my short UGAZ. After that UGAZ kept the same price while DGAZ fell sharply. It was a case of DGAZ being wrongly priced compared to the underlaying commodity.
3. Considering point two I should have been more invested in short UGAZ than I am now.
Here's how I would have played it differently. Make a limeted sized short bet at the first position. Wait until a substantially better price develops, bet another 5% short. (I did almost this, went into the second short position a little too fast.) Wait further,when an opportunity like this develops, bet but not too hard. Keep attention to difference between long and short ETF price. Make one more short or at least keep the previous shorts and then bet on longs.
I now live dangerously and lost almost 10% of the total portfolio value in one day. Tomorrow will tell what happens to my account.
Monday, January 27, 2014
I was looking at the larger trenline and missed the steep one in front of it. Well now we are at the steeper trendlines upper limit. I will continue to add short position on this trade. The markets are now highly volatile and there are several BOT patterns developing in many different places like UGAZ, BRZ, TUR. It is in times like this that it is so important to have cash on the sideline to be able to take advantage of what is happening. Hopefully UGAZ will top soon and that will give me more resources to play other markets.
Thursday, January 23, 2014
Wednesday, January 22, 2014
The most interesting leveraged ETF at the moment is the 3 X Junior Miners ETF: JDST. The reason? Volatility. Here it is compared to two other higly volatile ETFs (I also put the S&P in yellow in there for fun):
Also consider that this is a sector that has dropped 80% in the last years. The risk is reasonable.
I already invested in the bull ETF JNUG but after the latest runup it might be time for a breater. I sold a portion yesterday. I will add to the JNUG/JDST position on any counter rally.
Monday, January 20, 2014
Friday, January 17, 2014
I'm looking for an exit of DSLV. I consider this a bad trade, but not a loosing trade. I got in at 44.2, somewhat below the no 1 point in the chart. It was a bounce against resistance trade. But it hit the roof two more times at point 2 and 3 before weakening. It's been a two month wait and I'm still in the red. I expect it to hit the resistance floor soon and the I'll have a chance to get out of the trade with a small surplus. That would be good because I need to free some cash for other trades.
Monday, January 13, 2014
As I always like to bottom fish Turkey ETF TUR is looking interesting. But I haven't bought it yet. I had the feeling it might be more to come. It is now going through a coning face with a high likelyhood of going lower after that. Hopefully there will be another chance to enter below the last low.
(It seems I cannot upload a chart to blogger right now but will do that as soon as it is working again)
Ok here we go. And let's see what happened after I made this chart...
Looks like it's on its way, but it could of cource turn eatly. Any way I'm pretty close to fully invested so I would have to exit some other trades to play this.