FAS / FAZ / Daily Discussions / Archives / 11-04-2011 / Wednesday, March 30, 2011

Topie: Wednesday, March 30, 2011
March 30th, 2011 10:35 AM
membar FAS came within one penny of my FKOS sell stop before moving higher.

Still in my small batch of TNA from 80.xx. Not sure whether to sell or double down. Nothing seems to be able to stop this market from going up, up, up....
March 30th, 2011 10:37 AM
membar Also, BAL has been deflating lately. Wonder what the deal with that is.

Someone ask Allen something technical so that he comes out from lurking.
March 30th, 2011 10:45 AM
ISA_Coder went to go buy some TNA, put in a limit of 85, just missed buying it by 4 cents, then shot up over .5%.

sometimes limit buy orders help me get the exact price i want but other times it makes me miss an opportunity.

do other people on here use buy limit orders and if so, how do they work out for you?
(trying to start some discussion here since the boards have been dwindling a lot recently)
March 30th, 2011 10:50 AM
membar
Quote:
ISA_Coder wrote:
do other people on here use buy limit orders and if so, how do they work out for you?

I basically always use market orders now. If you want to do a limit order, consider selling a put - you'll get much more money (if it's a long-term hold).

Allen: I think I need to stop playing FKOS because I read that if you hold FAS for more than a few days, there's this thing called leverage decay which will make it go to zero.
March 30th, 2011 10:55 AM
Black Swan I do the limit buy orders, but I am ready to jump in and make a manual market buy if I am sure it won't reach my limit buy.

TNA today, but wish I had jumped into ERX early in the morning.
March 30th, 2011 10:55 AM
ISA_Coder
Quote:
membar wrote:
I basically always use market orders now. If you want to do a limit order, consider selling a put - you'll get much more money (if it's a long-term hold).


The reason why I do not like market orders anymore is because when the price is fluctuating a lot within a tiny range (like within a 10 cent range right now for TNA), i feel like putting in a limit order at any price within that tiny range will trigger (obviously trying to get the lowest buy price) but sometimes when i put in a market order, it always seems to fill towards a higher number, like scottrade executes it at the market price but if they see that the price was a few cents higher a second before or after the buy, then they just give me the higher price and keep the difference. I know that's what i would do if i had written their software, although that's probably illegal.


Quote:
membar wrote:
Allen: I think I need to stop playing FKOS because I read that if you hold FAS for more than a few days, there's this thing called leverage decay which will make it go to zero.


Yes, i have also heard of this decay but i really don't know anything about it, maybe allen could explain :p JK
March 30th, 2011 11:03 AM
Black Swan About leverage decay:
http://etfdailynews.com/blog/2009/07/13/the-real-decay-in-double-and-triple-leveraged-etfs-fas-faz-srs-skf/
March 30th, 2011 11:13 AM
BullDog Always use limit order even if you miss a trade. Mkt order is asking for the worst fill.
Leverage decay is over blow. I am holding substantial FAS and also trading FAS as often as I can. Batch system working out quite well.
March 30th, 2011 11:15 AM
membar (ISA_Coder and I were joking about leverage decay in order to lure Allen out of his cave.)

ISA_Coder: I agree with your assessment about limit orders for the kind of trading you're doing.
March 30th, 2011 11:25 AM
Black Swan As long as you play right and are aware of what would go wrong, you should be alright..

For example, if you bought FAS, FAZ and C on Feb 27th, 2009,
FAS @ 8.17
FAZ @ 309
C @ 1.50
Dow @ 7062,

You would have still gained in FAS and C.
But Dow is up 67%, FAS 94%, C 28% and FAZ has lost 89%. It's not really 3X gains in the long run. (percentages are not accurate- they are approximate).
March 30th, 2011 11:31 AM
ISA_Coder
Quote:
BullDog wrote:
Always use limit order even if you miss a trade. Mkt order is asking for the worst fill.


Agreed.


Quote:
membar wrote:
(ISA_Coder and I were joking about leverage decay in order to lure Allen out of his cave.)


yes this is true, i guess we'll have to try harder next time.

Quote:
membar wrote:
ISA_Coder: I agree with your assessment about limit orders for the kind of trading you're doing.


It's really all relative. I'm so used to FAS/FAZ that when i was about to buy some TNA, the fast fluctuations within a tight range is not what I'm used to so I was more compelled to get the lowest price within that range.

Looking back, I think the correct solution here is to stick to limit buy orders for my quick scalping strategy but simply pick a price that I feel is in the middle of this range, or at least not at the very bottom. Even 5 cents for TNA these days is only about .06%, peanuts.
It's easier to get the limit buy price i want for FAS/FAZ/TZA because the price doesn't fluctuate as fast because 1 penny is a higher percentage move for the lower priced ETF's.

It's all percentages!
March 30th, 2011 11:32 AM
BullDog If one is trading for small scalps, it is possible to miss trades with limit order. However, if you factor in 1 penny for the MM, set the limit order a few pennies above to catch FAS. Of course, the biggest benefit is that a limit order protects you from a sudden, fast moving crash.

So, what I will do is pay a few pennies more with a limit order, instead of being on the markets mercy for a market order.

I used to trade FAS frantically all day, but adding a factor of 'slow down' has really helped. No one ever made money being JUMPY. Easy does it. One thing I have learned over the years is that the beauty of FAS is that, it always comes around, but needs Patience.

Comments? :D
March 30th, 2011 11:35 AM
ISA_Coder well said BullDog, I have also been learning more and more over the past 6 months that patience with these ETF's really helps. I used to be so concerned with always making the correct decision right now at this instant, but I'm learning more to sit back and wait for what I feel are the best opportunities to jump in.
A big part of this is never get the feeling that you missed out on gains simply because you missed an entry point. There will ALWAYS be more opportunities.
March 30th, 2011 11:38 AM
Black Swan
Quote:
BullDog wrote:


I used to trade FAS frantically all day, but adding a factor of 'slow down' has really helped. No one ever made money being JUMPY. Easy does it. One thing I have learned over the years is that the beauty of FAS is that, it always comes around, but needs Patience.

Comments? :D


I still "jump" into 3X, but your strategy worked beautifully for my C- had something to buy and sell everyday :-)

With TNA, I usually do a scalp of 33 to 45 cents, and if it really catches on, I just slap a trailing loss and relax.
March 30th, 2011 11:54 AM
BullDog >isa - I used to be so concerned with always making the correct decision right >now at this instant, but I'm learning more to sit back and wait for what I feel >are the best opportunities to jump in.

EXACTLY the point, have to deal with randomness with randomness.
There is no right or wrong decision. It is very random.

Let us say u buy and it drops. Instead of beating yourself over the decision, just be patient, it will come back - guaranteed.

Just break your trading capital into pieces, so one piece will take to the cleaners and u can afford to sleep at night.

Do while (forever)
{
Buy, sell higher, wait if needed.
Sell, buy lower, wait if needed
}
March 30th, 2011 12:08 PM
membar
Quote:
BullDog wrote:
Do while (forever)
{
Buy, sell higher, wait if needed.
Sell, buy lower, wait if needed
}

Hmm. If someone bought FAS @ $39 in April 2010, they'd still be waiting. Or are you saying that playing with different batches compensates for this?

What should I be doing now? Selling my TNA I bought at 80.xx or holding?
March 30th, 2011 12:11 PM
Black Swan Sell and take profits membar. I would do it, but then, I pull the trigger too early:-) Trailing loss 1% below current price?
March 30th, 2011 12:19 PM
Black Swan Last batch of TNA set to sell at 86.98. Will it or won't it? :-)
March 30th, 2011 12:20 PM
BullDog The do while() loop is just the spirit. But here is what I mean.

Beat randomness with randomness approach:-
1. Break capital into batches
2. Buy, sell higher. Don't panic if it drops, Give it a few days if needed. If unable to sell higher, that 'low-to-high batch' is 'stuck' so to speak.
If all low-to-high batches get stuck, you can free up batches by shorting such batches that you already own.
3. Sell, buy lower. Don't panic if it does not come back down. Again give it some time to drop. If it never drops, that 'high- to-low batch' is stuck.
If all high-to-low batches get stuck, use cash that you have from the sells to begin new batch.

Key features:
smaller batches
Patience, no panic
Short your own shares if needed
Begin or reset batches
use a fixed gap to buy/sell which is generally a % of the ATR. Don't make the gap too small or too big. Experiment with different gap values and adjust gap with mkt conditions.
March 30th, 2011 12:21 PM
Black Swan
Quote:
BullDog wrote:
>isa - I used to be so concerned with always making the correct decision right >now at this instant, but I'm learning more to sit back and wait for what I feel >are the best opportunities to jump in.

EXACTLY the point, have to deal with randomness with randomness.
There is no right or wrong decision. It is very random.

Let us say u buy and it drops. Instead of beating yourself over the decision, just be patient, it will come back - guaranteed.

Just break your trading capital into pieces, so one piece will take to the cleaners and u can afford to sleep at night.

Do while (forever)
{
Buy, sell higher, wait if needed.
Sell, buy lower, wait if needed
}



I don't know.. I don't do bear trading well, but if I had held FAZ or TZA hoping it would turn around, would have lost a lot. Or if I had held last April's FAS.. but TNA would have paid off. I would reverse scalp (which is also one of your strategy) and recycle the money rather than wait patiently.
March 30th, 2011 12:47 PM
membar
Quote:
BullDog wrote:
The do while() loop is just the spirit. But here is what I mean.

Bulldog, do you have any FAS batches left over from last April? If not, how were you able to avoid this?
March 30th, 2011 01:12 PM
BullDog >membar- Bulldog, do you have any FAS batches left over from last April?

A disclaimer first - I do not claim to have a magic formula, any more than anyone else. I am just a regular guy trying my best to trade FAS. My system is far from perfect, does not work all the time, is difficult to back test and like any other system, there are no guarantees.

Last year I was trading v large amounts for small scalps. I was up huge last May (FAS around 40), and then took the huge dip. I did wait and FAS came back up recently. Since then, what I have done is , as FAS came back up above 30-34, I have diversified and moved several batches into secure assets like MO and T.

Trading on margin has caused me huge losses. But I do not use margin anymore and am doing way better. Also trading slowly with smaller amounts seems to be working much better, as opposed to take small amounts and run, but then come back quickly for more.
March 30th, 2011 01:41 PM
membar
Quote:
BullDog wrote:
A disclaimer first - I do not claim to have a magic formula, any more than anyone else. I am just a regular guy trying my best to trade FAS. My system is far from perfect, does not work all the time, is difficult to back test and like any other system, there are no guarantees.

You definitely have influenced the way I trade. I would have never bought small batches before (like the TNA, EUO and CCJ I currently have). I appreciate you sharing your insights with us.
March 30th, 2011 02:22 PM
membar So what's the vote? Do I sell my TNA or keep holding?
March 30th, 2011 03:48 PM
membar
Quote:
membar wrote:
So what's the vote? Do I sell my TNA or keep holding?

I sold at 87.47. Will try to buy back lower.
March 30th, 2011 04:18 PM
allen314159
Quote:
ISA_Coder wrote:
Yes, i have also heard of this decay but i really don't know anything about it, maybe allen could explain :p JK


Leverage decay? What's that? I thought leverage is always 3x?

:eek:

Whenever FAZ goes up, FAS goes down......and it works the other way around.
March 30th, 2011 06:58 PM
membar
Quote:
allen314159 wrote:
Whenever FAZ goes up, FAS goes down......and it works the other way around.

I remember that line!
March 30th, 2011 08:20 PM
nocash I think part of the problem is the things we wonder might happen next other people already know,ala inside information.can you even imagine how many people know ahead of time what the employment # is going to be. ISA I agree I don't like market orders iether,one thing I have learned is not to use round numbers for limits though.there are so many orders set there your better off with 85.07 or 84.88 buying or selling.