fOLLOWING UP ON THE PRIOR SPY RETURN OVER 5 YEARS: Looking at the leveraged SSO- The net returns appear to surpass the expected return. Many leveraged positions sharply decline in value compared to the underlying- The SSO is a 2x fund that would appear to have returned in excess of it's designed 2x leverage- i do not know if this is an accurate calculation- simply relying on the chart. I do know that some leveraged ETF's exhibit decline in spite of a positive performance in the underlying position- SSO appears to not exhibit that similar underperformance.
PJP- Nice performance over the 5 year period . It was pointed out to me that PJP has a 5 star morningstar rating. http://etfs.morningstar.com/quote?t=pjp and is considered a 'defensive' exposure to the market- with 5 year average returns of 30%!!! Now that is a nice average return- Your investment doubles in 3 years- It has exposure to large cap Pharma and some Biotech- approx 50% of the holdings are in large caps, with some 30 total positions. There are some 25 or so ETF's in the healthcare field-http://etfdb.com/etfdb-category/health-biotech-equities/ XBI- Morningstar has a 4 star rating. http://portfolios.morningstar.com/fund/holdings?t=ARCX:XBI®ion=usa&culture=en-US&cur= This ETF is Equal weighted- meaning it holds 86 positions and each position has the same amount- It gives wide exposure to the biotech field including smaller companies- IF Diversification in a portfolio is desireable- having some focused exposure to the healthcare/biotech arena through ETF's - and not betting on a single pharma stock makes sense. I think it is going to be prudent to have some exposure outside of the US Markets- as part of that diversified approach. Healthcare with an International ETF focus would make sense- As one ETFDB article pointed out- Having global exposure will reduce the impact of US gov't regulations http://etfdb.com/2013/healthcare-etfs-4-things-to-consider/
good article on SA on biotech/pharma http://seekingalpha.com/article/2915366-pharma-and-biotech-funds-add-zest-to-your-portfolio?page=2
Yellen speaks tomorrow- Likely the market will get an interpretation- Might go one way and reverse the other- Raised the stop on TBT- put in a buy order TLT. The goal of the buy-stop is to get filled only if the trade rises enough in my direction to activate my order....... Financials will likely 'depend' on the interpretation (XLF) XLK- tech is trucking higher- carried by AAPL Tightening a trailing stop on HACK
yELLEN SPOKE AND THE MARKET RESPONDED HIGHER. Tues 2.24.2015 I was filled .01 under my buy-stop order placed yesterday- Take it where you can. My buy-stop was well above yesterday's close- intentionally. I use the buy-stop as an insurance type of entry- that price at least has to move higher in my direction. The entry stop could have been just above Monday's price- but concerns that normal volatility would cause the stop to get filled and then the move reverse lower was definitely a reason to set a higher stop entry. Notice on this hourly chart the indecision of the opening bar pre-yellen's speech- with a move up, down and then a middle open close- With the market having the entire day to consume and digest the Yellen info, TLT closed right near the day's high- The stop-loss on this trade has to be based on the recent swing lows- A triple touch on the swing at the $126.00 level simply tells me that a $125.90 stop-loss should be as low as one would go- or the trade has failed below that level. I simply like the parameters of this trade, this entry level, and the relatively tight small distance to the P.O.F. This is a disciplined trade IMO.and I would like to point out that - win or lose - on this trade- That I am pleased with all aspects of this trade- Simply well executed according to the way I would approach each and every reversal of trend trade if i had the time to focus on each in this manner........... The entry level $128.50 - stop level 125.90 Puts $2.60 at RISK. What is important here in the 1st part of the calculation, is what % is the LOSS? For those unfamiliar with this exercise Potential loss $2.60 /128.50 (entry) =2.02% RISK. The second part of this exercise is what portion of the portfolio is at Risk within this Entry in this position. If it's over 2% Risk- it deserves to be reevaluated- and perhaps modified.
While it is normal to talk about, and focus on the winning trades we make, we learn more by our losing trades if we take the time to set the negative emotions aside and recognize that if you don't have losers, you're not trading- The TBT trade- I was several late in taking this trade- but you never know when a momentum move will just keep moving higher. I won't make excuses- about lack of freed cash, work schedule etc. That may or may not have occurred with this trade- I have been lightening up on my bond position in the IRA though- In all honesty, I don't comprehend the bond/dollar dynamic- Bonds were being sold, I entered day's late into the reversal, and the trade went flat after my entry. Poor timing- the market influences changed and evolved- but that is the market's perogotive. The entry could have been made several days earlier on the reversal of the downtrend- As I try to illustrate in the chart though- the several earlier reversals looked promising -but proved to be bull traps- This is typical of ROT (reversal of Trend) trades- the 1st reaction in a decline is not usually successful - Does not typically reverse into a V reversal- although they do occur. One can try to establish all kinds of parameters on entering into a ROT trade- but I think the idea of "the early bird gets the worm" does not apply well in this type of scenario. Simply being willing to take the early loss is taking the lesser loss. Stuff happens, trades fail, -and if you trade, you have losers- Manage the losing trade by making it hurt less- make the loss a smaller loss- Conversely- we can want to reinforce a positive in our trading by taking a too quick profit- and not allowing the winning trade to become the bigger win because we nip it off early to capture a small gain. This is just human nature- We want to get on base- particularly when we've had a series of strike outs- The TBT trade stopped out yesterday, -just as the TLT buy-stop filled- Kind of a Yang and Ying going on.....LOL.... When the trade appeared to weaken- and this had the gov't influence behind it- I was willing to put in a buy-stop on the TLT, and raise the stop on TBT- - both orders executed. I lost some money on the TBT trade . Losing on some trades is Normal and Expected. In this thread i hope I accurately convey that i certainly have losers, and don't focus more on "winners' . Winners are more pleasant to discuss- but how we manage our losing trades tells the long term story of where we will eventually arrive at some future destination. The danger inherent in a faster time frame chart is that the movements appear to have a magnitude of significance- when viewed through a slower- daily chart- are relatively minor- The benefit of a faster chart is that the 'signals' can be viewed in more than a single bar -and perhaps give an earlier indication - in this case- price weakness- that one can choose to respond to- With the perceived break down in the momentum, the stop-loss was raised and indeed was taken out. This appears on a follow up day to have been a good exit because price continued to weaken lower. If the markets were trending strongly- perhaps I would defer to the daily trend- In a more choppy undecided market- i am more defensive when a position appears to turn against me- Eventually this stance will prove incorrect as the attitude of the market will assert itself in one direction or the other. I think I am overall bullish on th markets working higher- Losing Trade :Chart TBT
You had more than one opportunity to sell your $45.18 for profits, din't you? Just a 20-20 hind sight. It may tell you to take a quick profit next time if you know that you have a delayed entry, or tell you not to get in since you won't have much time left to have a long run. Good luck to your TLT trade!
So sorry about my previous comment. I did not notice that your chart is a 2 hour chart. No, you did not have any opportunity to get out. You went in on the exhaustion day and followed with a distribution day. Sorry! Day traders use 2 hour chart. End of day traders use daily, weekly, and monthly chart.
Hi Swift- Thanks for posting and the opportunity to respond- Most Day traders likely use much faster time frame charts to take their entrys and exits within the up and down swings that occur durring the course of a single day. A day trader that uses a 1 minute or 3 minute chart would perhaps find multiple -10+ entries where they would Risk only a few pennies on each trade- and take quick profits as well. A day trader that uses a larger time frame chart -15 minute- 30 minute- is trading wider swings than the 1-3 minute, Their chart will show different trends than the 1-3 minute chart, and will Risk a larger amount on his trades- also expecting to make a larger amount on his winning trades than the faster 1-3 min. trader. He will likely find fewer trades that meet his setups during the day, and of longer duration. Perhaps he finds 2-4 periods in the course of the day. Progressively, both of the day traders take their profits within the trends he captures during the course of the day, and most do not plan to hold positions overnight- The swing trader (EOD) can hold a trade for a few days to weeks, or months- position traders or investors likely hold for months and even years- Each of these traders- Swing trader-Days position trader- Weeks Investor trader- months progressively are hoping for a larger gain than the shorter time frame trader. Each of these traders are willing to RISK more to gain more- than the other- This is because the volatility swings on a monthly chart can be much wider than a weekly, and the weekly much wider than the daily, and the daily much wider than the 2 hour, and the 2 hour much wider than the 15 minute, etc. As an EOD swing trader, I am not restricted to viewing price solely through a longer time frame chart- I prefer to see the 4 incremental price action movements that make up the day on a 2 hr chart- However, I need to make a decision if I should respond to the earlier signals given on the 2 hour chart- or do I wait for the 'bigger picture' of the daily chart- The 2 hr chart I posted on my sell would not have appeared to be a reason to exit on the weekly- even perhaps not on the daily. It is similar to the trader that focuses on the daily chart- Price may roll over and appear to be selling off on the daily, but the weekly chart would still appear positive. The trader that uses the daily chart may react to the information presented while the weekly trader would not be concerned. Is there any right or wrong method? No- simply what the individual is comfortable with and how much they are willing to RISK on a position or trade- Specific to the TBT trade- My entry was not on a climax- but on a bullish continuation of the reversal of trend- It was followed by several days of normal sideways consolidation- It could have continued higher- and likely would have- If the Fed announced they would tighten sooner than their decision to delay the rate increase. I sold on the initial signs of weakness because i felt the market had interpreted the Fed's move as negative for TBT- No point in Risking more to argue with the market. The TLT buy-stop was executed on the same day- I tried to position myself to protect a position from loss and to get the early counter position reaction. I don't know where this trade goes- I may get stopped of TLT as well. Since TLT held the larger recent period uptrending- I think it has promise to resume that uptrend- but there are market factors & reactions that have more to do with policy interpretation than considering a company's balance sheet. Thanks for posting-I Always appreciate a different point of view!