|My Take on How to trade leveraged, long and short bias ETF's. This is how I do it. I |
certainly don't know everything but have had resonable success with this method. I use
the following for Swing trading, and Day trades.
1. We will use the S&P 500 as our example. So then that is the Index.
2. I sometimes will open a Swing Position as well as Daytrade the SSO & SDS
Using the SPY as the Index indicator for entry and exit points.
3. The SSO is a double leveraged, long bias and the SDS is a double leveraged, Short
bias. So if the market is trending down, and you are skiddish about short selling an
individual stock, the you can use the short biased ETF's to keep you in the game.
4. I use 3 Charts of the SPY, 1 on a 5 min, 1 on a 15 and 1 on an hourly. When looking
to enter a swing trade I also use a Daily chart. I like these charts all up at once so I
don't have to keep switching to diff time frames on a single chart. All the information
is readily available at a glance.
5. The indicators I have plotted on the SPY Charts are, 10, 20 & 50 sma's
I use Fast stochastics for day trades and slow stochastics for swing trades.
6. The most important thing to know is that you do NOT use the indicators that are on
the SSO and SDS charts as those ETF's merely Follow the Index. You use the
information on the Index (SPY) to determing what you do with the 2 ETF's
7. You can use your Stochastics to help you determine when to enter and exit trades.
8. On days when I have good information that the market is likely to fall, I will take
positions in several short bias ETF's such as FAZ, TAZ, TYP and so on.
9. Different ETF;s will follow different index's, Some will follow the financials, some
the Nasdaq or Q's, others the Russel, and still others the DOW.
10. I will do some in depth discussions of this soon. For now I just wanted you to
understand, that you Watch the Main Index related to you ETF and us the indicators
off the Index and Do Not Use the Indicators on the ETF's Chart. This information
alone should improve your success greatly.
I have started a Forum, SHADOW ISLAND. Feel free to stop by and read about news and info you won't get from the main stream media. We trade ETF;s Gold and silver miners and small caps including otcbb, nyse, nasdaq, amex, Under 10.00 per share. Rules not firm. This is still America and we believe in freedom of
speech. No cursing please. http://www.thelion.com/bin/forum.cgi?tf=shadow_island