FAS/FAZ for New Week 4/27

Quote from scot.mcpherson:

Ahh ok....well that assumes you aren't all-in on that 1 in the hole.
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Yes, it depends on it.

Which is why ETF's can be such good tools for <25K accounts. No need to take big losses if you plan for it.

Which is ALSO why the 3x can be such good value. "Kinda" leveraged for big % gains when you're right, but the availability of the opposite position to eliminate big losses when you're wrong and don't have any day trades available for a couple of days.

Either way works though.

Go "all in" and take your big losses if you must..... or only go <1x in and eliminate big losses. Before I had >25K, I took the conservative route, and it worked fine.

Options work too, apparently.
 
Quote from scot.mcpherson:

and why not go long with FAZ at 8.40-8.50 when it is likely to gain a $1, but has a fair likelihood to gain as much as $3-5. FAS isn't going to make that dramtic a drop, it will drop to 6 at most unless things go really crazy, but if they DO go really crazy, don't you want to be on FAZ and take that ride?


Maybe you can just explain to me what makes shorting FAS more attractive than going long FAZ?
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By shorting FAS/FAZ, the time decay will work for him :-) This is a well known strategy in highly leveraged ETFs but these shares is tough to borrow and most likely he'll get a cover-call next day (or bit late depending upon broker).

Lets go through a simple case - something happened in may-4 report and FAZ is at 30 ; one who bought FAZ at $9 has $21 gain. FAS may drop max to $3 for such move, so a little profit of $6 for someone who shorted FAS.
 
The decay factor doesn't really work well unless you can hold the ETFs for an extended time frame.

I still don't get it as far as your short term explanation is concerned, you just told me about not making as much profit.


On the other hand, looks like a new good entrypoint has opened up on FAZ. I am not concerned about my position it will work out well for me, but its a good time for new comers to enter.
 
Why the hell would you stop? We are still at the top of a market. This isn't the same as buying when the market is low, and it could potnetially go lower...At the top of the market people start selling and driving the price down, that's awesome....don't stop unless you think you can get in at a better price after you have stopped.

You don't think the market is going to climb to inifinity do you?
 
Quote from scot.mcpherson:

The decay factor doesn't really work well unless you can hold the ETFs for an extended time frame.

I still don't get it as far as your short term explanation is concerned, you just told me about not making as much profit.
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Exactly.

Hedging is ok if you're a huge fund and couldn't liquidate positions quickly, but not really needed for what WE do.

The only hedging I've done is like I explained above - when I didn't have any daytrades available.

Also note that I did a hybrid of what i described. I also went "all in" when I had >1 day trade available. I only went <1x my account when I had just 1 "in the hole".

It worked like this - Say on Wed I had only 1 dt available, so I would use <1x my account, just in case. So then it moved against me, and I bought the inverse of whatever I was holding and walked away for the rest of the day.

In the morning, say the market is up, and the long side is up 5%. You expect a retrace to zero, so sell the long and hold the short, and maybe pick up 3-4%. Neither sell counts as a dt against you.

It's Thursday, and now you have 2 dt available. Revert to "all in" on your next trade.

Rinse and repeat......
 
Quote from scot.mcpherson:

Don't stop unless you think you can get in at a better price after you have stopped.

You don't think the market is going to climb to infinity do you?
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FAZ can easily go to 7 if market manipulators decide to push the market up.

I always use a very tight stop when adding to loosing position and unload the extra lot with some decent profit.

How are you guys playing FAZ/FAS?
 
I had FAS overnight and just sold it.

I'm prolly done for now, since it's FED day, and take the dog to the river and throw the tennis ball for him. He's a fetch maniac....:eek:
 
Well nice returns for your overnight hold. I could've closed my position, but I suspected a gap up on faz, but because of the late drop in price, I was wrong. I could have closed my position but I would have been out of hte market until next Monday if I had.
 
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