Wednesday, January 1, 2014

VIX55 / GDX55

Greetings all,

Let me first explain why this has become such a sorry excuse for a webpage the last several months.  The year 2013 was one of great stress and overall busyness for me and my family.  I'll spare the details but I feel like I've barely been able to keep my head above water, let alone spend much time on here keeping things fresh.

Additionally, the JTS and CCI are sometimes difficult and tedious to track on a daily basis.  Thus, if I wanted to keep this going any longer something simpler would have to suffice.  I was messing around one day with the Stochastic RSI tool trying to capitalize on the large swings of DUST/NUGT.  It's not uncommon for them to move 10% a day.  Trying to hit the pivot is the tricky part though, obviously.  If you miss, you can get dinged hard and fast.  To keep things simple, and simple is what I need, I've honed in on entering a trade when the StochRSI has been pegged below 5 or above 95 for 3 straight days.  I've looked at many exit strategies such as simply selling after 5 days or waiting for StochRSI to reverse to a given level, but what I found worked best was holding for a 5% profit, which almost always occurred within 5 days.  Holding longer opens one up to more risk than I feel is acceptable considering how these 3x miners can move!

The system can obviously be made more complex incorporating other indicators such as CCI.  One particular strategy that works well is buying after only 1 or 2 consecutive 5 or 95 days (rather than 3) if the CCI has been respectively strong or weak in the 2 weeks leading up the signal triggering.   It's the old adage "buy the dip".   When things have just been meandering around though, buying too early can kill you which is why 3 days in general is a good number.  Further, if DUST/NUGT has been weak for 10 days or so and you aren't invested, you will most likely could make way more than 5%.   But for my purposes, to keep things simple I'm aiming for 5%.  If it fails to hit, I'll sell on the close on Day 5.   Trades are minimal - only about 1 per month.  But since this works equally as well for UVXY, we are up to about 2 trades per month on average.   Win rates are very good.  Average losses for trades that don't hit the magic 5% mark are usually manageable. I'll discuss this and more at a later date- this introductory email is already a bit too long.  Thanks and God bless! Happy new year! 



5 comments:

  1. Looking forward to this. Happy New Year!

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  2. J, for you StochRSI, what period are you using to determine your 5/95??

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  3. The usual 14, same for CCI. Thanks!

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  4. Thanks for all your effort J. Much appreciated!

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