Battle between Bulls vs Bears: ETF hedge strategy

Discussion in 'ETFs' started by KCalhoun, Jun 3, 2020.

  1. KCalhoun

    KCalhoun Sponsor

    After making solid profits trading inverse ETFs during feb/march, I stubbornly kept trading them apr/may, giving back much of my profit trying to bottomfish; I was a skeptic of the bounce.

    But price action is all that matters. So I'm starting fresh, using my ETF arb strategy I published last year. It involves starting both long- and short-bias positions with roughly same amount of capital, then scaling over time (a week or two) into winners and out of losers. Starting tiny size at first.

    I need to reduce the number of inverses to 2-3; for now:
    Long bias = SPXL TNA

    Goal initially is 'stable breakeven' such that losses in one set are closely offset by profits in other set. The challenge, which I'd appreciate your ideas on, is how to scale profitably, taking into account morning gaps, for 1-2 week swingtrading. Goal is to scale into 10-15k capital in winning set to book 3k+ profit.

    as of 6:37amET 6/3 long bias are gapping up

    Any suggestions for improving or refining the strategy test? (other than reducing # of etfs)

    Current positions:


    Last edited: Jun 3, 2020
    1957may10 likes this.
  2. If you memorize, I was stating the only factor as I saw was Trump to penalize China for Hong Kong. However I thought it could be only political action. It was some corrections for two days and then markets turned back to green.
    In my opinion now markets turn to hold a big techs but pointed to bitten cruise, retail, oil stocks. I’m trading with m, kss, ccl, NCLH, tjx. They still vulnerable and swinging periodically.
    Works for me. Was buying gold mining and inverses a little with a little profits.
    KCalhoun likes this.
  3. SanMiguel


    I can't see how this can go any higher.

    Re strategy, can you scale based on winning percent? A manual scale past SR would be good but difficult to backtest
    KCalhoun likes this.
  4. KCalhoun

    KCalhoun Sponsor

    Right, there's other sectors to trade,
    cruise CCL NCLH
    Airlines DAL LUV UAL
    Casino PENN MGM DKNG
    Pot CGC TLRY

    Now that S&P > 3000 and trending a bit I'm testing this ETF strategy too
    1957may10 likes this.
  5. hafez50


    I don't like this strategy of hedging with 3x etfs due to massive time premium erosion . For instance if we stay in a 100-200 pt range but its over time and your perfectly hedged your going to lose money overall due to premium erosion. These are no different that options . Not only does your direction have to be right but your timing must be right . The biggest mistake traders make with these is they perceive them as stocks . Like soxs . It hit $187 in Dec 2018 and its $6.50 now. People go wow thats cheap.These are longer term options . Maybe i'm wrong. Try it small and see how it goes .
    murray t turtle, fan27 and KCalhoun like this.
  6. I sold and gain a few thousands for retail, cruise, penn stocks. I’m waiting now for some dive down to buy them back : tjx, kss, NCLH, penn.
    Bought gold (barrick mining) price is great 23.12 I got.
    Last edited: Jun 3, 2020
    KCalhoun likes this.
  7. deaddog


    Does your back test show that this is possible?
  8. deaddog


    Is that 3K profit in 2 weeks? 20% every 2 weeks would be 500% per year. That would be great trading.
    KCalhoun likes this.
  9. deaddog


    The problem I see is you are day trading and swing trading at the same time. Especially with leveraged ETFs.

    You enter both sides and jettison the loser as a day trade and scale into the position that is positive as a swing trade. Holding overnight has the risk of a reversal and a gap down giving you a loss on both positions.

    I'd like to see the trading plan for this strategy, at least the risk control portion of it.
    KCalhoun and 1957may10 like this.
  10. KCalhoun

    KCalhoun Sponsor

    Good points, I'm also daytrading to lock in gains on winners, eg I just tightened in trailing stops to .30 on SPXL TNA. I also just entered buy stop orders slightly above market for TZA TVIX in case they bounce.

    Probably smart to continue overnight holds at equal capital so gap direction doesn't matter.
    #10     Jun 3, 2020