A profitable journal with all entries/exits posted in advance

Heading towards zero has nothing to do with tracking errors. It's due to costs and maintenance fees.

 

thank you for adding so much constructive information..

i consider a tracking error to be where an etf attempts to track 3x the move of an index. so if the index moves 1%, and the etf does not track exactly 3%, then i would call that a tracking error. costs and maintenance fees and spreads on options are all reasons these tracking errors exist.

do you have anything constructive to add?

 

I meant I don't want to be adding to a position as the price is going up.

When averaging down, you're buying more shares at a better price so it's costing you less per share.

Averaging down into a short position of an inverse ETF is increasing your position at a more expensive price each time.

I was under the impression that the "tracking errors" occurred over a long period of time because the weighted ETFs attempt to do 2x or 3x the performance of the underlying on a daily basis, but as such the long term performance doesn't always end up being exactly 2x or 3x. I think there's even a note about that in the prospectus.

I'll check out QLD vs QID over a longer period of time and see what that looks like.

 

ah okay i get what you are saying, that makes sense

 

Alright:

SPY: -$391

QLD: -190

I kinda just want to close out the SPY position and only focus on QLD now but we will see.

 

SPY: -$379

QLD: -$157

 

You could close it and transfer the equivalent capital to the other one.

 

That is actually not a bad idea. The cost would basically be two commissions.

It would change the average cost, too, but I could recalculate everything based on the new numbers and just buy more/less as necessary.

 

I might just make it simple and sell the SPY and buy like 75 extra shares of QLD. It probably isn't equivalent but it doesn't really matter, I just want to focus on QLD right now.

Then again, that will change my starting amount and make all subsequent adds larger.

I might just close the SPY position and continue on with the QLD as is, because a few points up with QLD will cancel out the loss from selling SPY early, anyway.

One thing that will be different is QLD doesn't pay a dividend, so holding positions for extended periods of time won't pay any extra.

 

I read somewhere that the market was closed today for Veterans Day so I didn't even watch the market at all today. Whoops.

11/12/2012:

SPY: -$369

QLD: -$160