I trade these too and also have a position in FAS. I run 4 models that use the volatility of the Russell 1000 Financial Services Index to simulate closing prices on FAS after n days and tonight ran 40,000 ten day price paths (10,000 price paths per model and the models were in agreement). The results were (numbers rounded): There's a 50% chance the highest closing price of the next 10 trading days will be above 12 There's a 30% chance the highest closing price of the next 10 trading days will be above 15 There's a 10% chance the highest closing price of the next 10 trading days will be above 20 There's a 50% chance the lowest closing price of the next 10 trading days will be below 7 There's a 30% chance the lowest closing price of the next 10 trading days will be below 6 There's a 10% chance the lowest closing price of the next 10 trading days will be below 4
As I have said before I do not and will not trade this very often. BUT I wanted to ask anyone with experience trading this if they have used candlesticks and bollinger bands to trade this. If I am done trading I will virtual trade this ETF and I have done a decent trading it.
Trader666, You can derive these probablities directly with a bit of math. I am however using a stochastic simulation (MC, like you) for some more complex strategies. Interested to know what you have discovered.
Trader666, how did you come up with that? i have been trying to trade these two and have been having absolutely no success. losing money left and right. strangely enough i made lots of money last few months when trading uyg/skf instead. coincidence? maybe... i am still a beginner. i would love to hear any strategies people are trying for these two ETF's.
randomguy, Have you charted any type of study with the FAS chart like the Bollinger bands. I am doing that with virtual trading and have found that if I wait until these 5 things happen I have been profitable. 1) Wait until 10-10:30am. 2)Keep an eye on Russell financial index and DOW 2)Start watching FAS once price drops below Bollinger band. 3)Let price run below Bollinger band for a bit, see what it wants to do. 4)Once it reenters band buy it. 5)Do not hold too long, unless you want to use tight stops which could limit profits but make a lot of money.(i prefer selling for quick gain) Worked for me today. I was up 1K early and I been up for the week so I grant myself a gamble play. Although I don't think it was a gamble. Made $800 on it buying at 11:58 at 8.31 selling at 8.41 once it neared the upper band for my chart. Left a lot on the table but made money. At 11:58 the dow and russell had just fallen hard too. Are you holding too long when you get in the green? ---OHHH... use a stop loss on this!!!! If you do not guess on the timing correctly do not let it bite you in the ass. I set mine at 8.15 or 2% below max I could lose was $1330. I understand it is a 3X ETF so more % might be wanted but I say hell no. ---I need to stop reading this thread and delete this ETF from my watch screen
that seems like a really good strategy urrterrible mine had been just to wait till 10:00 and buy which ever one was bullish on macd and dmi. probably a lot of my problem is that i want to hold till the end of the day. once i sell i cant buy back into one or the other till that stupid 3 day grace period ends (i dont have margin). i guess i would be better off selling while im ahead even if it only lasts 1 hour. QUOTE: ---I need to stop reading this thread and delete this ETF from my watch screen END QUOTE why?
EVAP and randomguy, you can also estimate probabilities from option deltas but I prefer sims for flexibility and also to look at distributions of results. I don't have time now to go into details but my models are home made and if enough people were interested maybe we could start a thread to share ideas. P.S. The estimates I posted were for the highest and lowest closing prices of the next 10 days (which might occur on any of the 10 days), not the highest and lowest closing price on day 10.