RE: 3X Inverses & M.A.

Discussion in 'ETFs' started by dearinfinity, Apr 20, 2009.

  1. How relevant are moving averages for these leveraged ETFs? If applicable, what is the most efficient/accurate moving average to use and with what time period when looking at a 2-4 day outcome?

    Also, how do the prices of these ETFs change under high volume (like today, for instance)? I am having trouble comprehending how it is that the ETF can maintain its pricing integrity under a flock of heavy buyers or sellers. Is there a lot of institutional arbitrage going on with these instruments?
  2. Yes-- I've read these articles, and I am aware of the math behind the greater downside risk if held over time. However in a possible downward rally, I see no downside so long as appropriate stop losses are used. That is my question re: the M.A. I'm trying to figure out where to create stop losses on my FAZ/SRS positions. I'm in @ 8.60 and 27 roughly, and I'm looking at stop loss around 10.50 & 30.85, slightly under the 50MA. Just wasn't sure if this was the right tactic. I understand my risk and know what I'm willing to lose, but was wondering if these things behave at all intelligibly with respect to the MA. Thanks
  3. IMO - do your TA on the actual index then use the 3X's as the vehicle. Personally, I tend not put much weight in the leveraged MA's.