Hello,
I am new here so I did not know where to post this question, but here goes. I am looking at the direxion tna/tza system. Does it trade only these two instruments? Are there more than one position open at a time? Is anybody out there trading it? I tried to send the developer a private message but I have not heard back. Thanks
Brandon,
You can see how many positions are open at one time by studying the closed trades list on the system page on the Collective2 website version of the system. In my past experience with it, there are generally 2-3 open at one time. It does not only trade TNA/TZA, but uses them often along with other ETFs such as TVIX, and others. I did trade it for awhile on autotrade. The developer has done an outstanding job so far, but there is alot of risk in being 100% invested in leveraged ETFs, so be aware of the risks. Alot of profit generally comes with higher risk.
Barbara,
Thanks for the reply. Do you know if this is a mechanical system, or is there some discrestion involved. Looks great, just would like to watch it a while. Are you still trading the system? Thanks again.
Brandon
Brandon,
I don’t know exactly how much is mechanical and how much discretion so I don’t want to make a guess. Keep trying to reach Pal for more information on that. I am not still trading it, as I switched to a system with less volatility. See Matthew Klein’s article “Why you should date an ugly girlfriend.”
Just a suggestion. You dont have to be invested 100% all the time when you are just beginning to trade an account. I would initially start with upto 50% invested in leveraged ETFs and around 50% in SHY, a 1x ETF that invests in 1-3 year Treasuries. This is a a half kelly bet and it has only a 1/9 chance of halving their bankroll before doubling it. Once it has doubled, i.e., say an initial bankroll of $1k has grown to $2k, move the original $1k into SHY and invest the remaining $1k.
Always take out the original as soon as it has doubled and then play with the remaining half. If you want to invest more than $1k say another $1k after we moved the original $1k to SHY, the bankroll now becomes $2k, we will repeat the whole process, i.e., half kelly bet (50% cash, 50% invested) and then move the $2k to SHY once the bank roll has doubled again and play with the remaining $2k etc,
As time goes by and you gain more confidence with the system you are trading and you have completely conquered your emotions (fear, greed, hope and guilt) and become a seasoned trader (which you may already be), you can slowly increase the percentage allocations you invest and finally when you are fully confident, invest 100%.
Even some of the worlds best investors like Buffet (if you look at the Berkshire Hathaways equity curve), has had several 50% drawdowns before he recouped what he invested but nobody talks much about that. He invests enormous amounts of money and goes against whole world but has the courage and conviction to stick to his proven methodology of buying value and not overpaying for it inspite of drawdowns like these.
The markets lately have become more volatile due to the situation in Europe. It is a Charlie Brown market. Just as bulls are sure of their argument, bad news comes from Europe, earnings, labor statistics, or the economy in general. And as bears see their viewpoint being vindicated, "good" news comes from Europe, earnings, labor or the economy. And if one thought this was a trading range market, the stocks proceed to take out their trading range lows, only to then take out their trading range highs. Lucy is everywhere.
It has been challenging to trade a choppy market, but part of the learning process is in building confidence to a degree that one can be almost certain (which statistically is 95% confidence interval.) Trading is a game of probabilities. One doesnt have to be correct all the time to make money at the end of the month. Just have to follow your rules. Gauge the odds. Trade the market we got, not the one we want.
Different market conditions (which is also very difficult to identify) require different money management strategies which the system should make it apparent. In general choppy (non-trending) markets are very volatile. It is better to stay in cash. I probably will broadcast a message about the market condition (trending or non-trending) every day so that the subscriber can decide for themselves whether they want to keep trading (which I will do except on thinly traded days like coming Friday) or move to cash.
Good call Barbara…
I never got a response on how stops are used in this system… but I guess my question has been answered in recent trades.
Adrian,
Thanks. People need to understand that being 100% invested in highly leveraged funds, going overnight and for days with no tight stops is a highly risky business. It makes for some stellar gains when you are right, but when you are wrong – watch out!
Hey guys whats going on with this system? 60% drawdown? Thats massive.
