So I said that I was going to take a position in SLV when the current downward wave concluded. I promised Chowdersilver that I would let him know if I followed through or not so here's the update. First off, I came up with the brilliant idea of getting in now on an inverse ETF so that i didn't have to wait until the downward wave concluded. The second brilliant idea I had was to use a 3x ETF (DSLV) to multiply my brilliance 3 fold. I took the position at 9:30am, in less than an hour I was -$500US, quickly followed by -$1000. An hour later I had zoomed passed -$1500US. By 1:30 I watched slackjawed as -$2000 came and went, at -$2300 i may have wet myself. Had a bit of a recovery at the end of the day and am currently sitting at -$1400. We'll see what tomorrow brings...
Source: Leveraged ETFs on a volatile commodity. Tell me you are not on margin. Please please dump wave theory and TA. I just can't understand this. We are very very very different people.
I like the cat meme, thanks Yeah feeling pretty stupid atm, but hoping it will all work out tomorrow.
Neither margin or T/A is the issue in this one - both are safe and lucrative tools when used correctly. It is the lack of risk management that is the problem.
Thanks for taking time to post. It's nice to see the wins and the losses and hope tomorrow brings better news for you. We have all read the sold at $45, bought at $10, sold again at $40, bought again at ten cents posts. Ya, right.
I actually bought at $15 a few years back and sold at $35. But I had pressure to sell due to unforeseen circumstances rather than some speculator instinct. I just lucked out on the timing. My kitty didn't make it but I'd do it again.
I got out this morning at -$650. Then took a position on USLV and gained back another $300 so I'm currently at -$350 which is OK by me, I learned allot doing this. I figure the $350 I lost was the cost of learning, and I intend to make it back and then some. I figured out where I went wrong yesterday, at least I think I did, I need to be very cognizant of the RSI (@5 minutes) and enter when its pushing through 30 then exit when it touches 60 (reverse that for short positions). This is the strategy I used today and I seemed to have much more control of the situation. I think I will also scale back the size of the the positions and give myself some time to get my feet wet rather than diving in like I did yesterday. I ran larger simulated positions along side my real one today, I think I will continue doing that for a while. My goal for the day was to get my $650 back, it's going to bug me a little that the markets are closed tomorrow but at least I'm not going into the weekend at -$2300 . I really want to make this work, I've come to realize that the stack is not really an investment (i will keep stacking though) and feel it would be irresponsible to not try and expand my horizons. EDIT: One other thing, I'm kinda glad it happened the way it did, it give me a healthy respect for what could go wrong and how quickly it can go wrong without paying too dearly for the lesson.
Niveka, Thanks for the update. May I ask what the options are for buying and selling like you describe? What are some reputable sites commonly used? Wow, who needs Vegas
Gota be in to win. And while many will say that losing what you did was silly , i am going to agree with your "lesson learned" theory. It is all well and good reading and talking about things , but i for one only really learn when i am doing these things. Good learning curve.
chowder, I was just buying shares, not options, in two 3x silver ETF's, USLV for long positions and DSLV for short positions. I used Fidelity Active Trader Pro to watch the market and place the trades. I find ATP quite nice and very sophisticated but really have nothing to compare it to as I'm quite new to this. I set my screen up to show USLV and DSLV side by side on a 5 minute time scale and track the RSI for each one. I wait for the RSI to bottom and start an upward trend then as it pushes through 30 I enter the position, then when it makes it to 60 I exit. Exiting at 60 will almost always leave money on the table but what I'm looking for is something that I can repeat numerous times and consistently come out on top, I'm willing to leave the top 60-100 RSI range to the riskier folks. The general idea is to safely ride the middle portion of a trend repeatably over and over again rather than trying to get every cent out of a trend by riding it from beginning to end. The nice thing is that you can play both sides, i.e. start out with a long position in USLV, ride it up to RSI 60, as its creeping up you can look over at the RSI for DSLV and see it creeping down, when you hit RSI 60 on USLV the RSI on DSLV will hopefully be close to a reset. Exit your long position and go make a sandwich or wrestle with the dog, by then the RSI for DSLV should have hit bottom and started an upward trend so now you just wait for it to push through 30 before taking a position in DSLV. I suppose you could do this loop for as long as you like. Hope I explained this clearly, if not let me know and I will try again. Also, I'm just explaining what I'm trying to work out for myself, I cant say that this system will not lose money, so don't take any positions based on my advice, I'm very new to this. The area that seems the riskiest to me, and what happened to me yesterday is that from time to time the RSI can dump back to bottom after breaking 30. In that case you have already taken your position and then the bottom falls out of the momentum. The obvious way to counter that is to double down when it pushes through 30 the second time, or in yesterdays case triple down again when it dumps a second time and then pushes through 30 a third time, eventually you know its going to run, but cajons definitely come into play here. I'm still not sure how to handle this situation other than what I described, I'd like to find a solution that requires less commitment than a double/triple down.
Leveraged ETFs are meant for a very short-term play only.. Like, closing out within the trading day -- maybe held overnight, tops, if you're feeling particularly saucy. You can make a lot of money quickly. And also lose a lot quickly. My 2 cents, but stay away.. Unless it's $$ that otherwise would have been wasted at the casino or track or something, heh.
Thanks for the very clear explanation. It sounds pretty exciting, but probably too risky for me (spineless).
RSI is riddled with false signals and is pretty useless if you're using it without any other indicators.
Sounds like something I need to know more about. Anything simple enough to elaborate on in this post or would it be to difficult to explain here?
