09-08-2011, 03:33 PM
I want to share a little profitable game I've been playing with TNA and TZA. Its a protection scheme so it fits in this thread.
I'm looking at the DOW and seeing what I think are dramatic changes into a channel. Right now I see a channel of a high of around 11500 and a low of 11100. This channel shifts and moves around and is highly subjective. In June / July I was calling it 12500 and 12100. I'm basically betting on the over all market going up or down inside the channel, but protecting myself with bracketed trailing stop orders. The risk of over all loss is pretty small in my opinion. I have been popping fast short term 10 to 20% gains, while only risking around 4% losses. And the losses mitigate as the stock goes up.
Again, TNA and TZA are triple leveraged ETF's and can be very risky. So this is not for the faint at heart. But they are also capable of 5turing very fast profits. For instance, today the DOW went down and TZA up 6.5%. I bought it my trailing loss has followed the stock up so that my worse loss is about 1% now. Ill explain more later, if you don't understand bracketed trading with trailing stops.
The trade above. I bought TNA at 38.23, and put in a bracketed sell order with a trailing stop. The bracket was $45 sell with a $2 trailing loss. It triggered yesterday at $45 for a 17.68% gain. This was basically a bet that the DOW would go up from its drop into the low 11k's. It did. But the most I would have lost was $2 a share and this risk was removed as the stop went up with the price of the stock automatically.
To do this all you have to do is buy the stock, and then put a bracketed sell order in right away, defining the high procei you want to sell at, and the trailing stop that will follow the stock up or trigger a sell if its hit. I use $2 for these stocks at around 40ish a share.
9/6 Buy
TNA 38.23 (dow at 10986)
Bracketed sell order at $45. Means if the stock hits $45 it is auto sold.
Trailing stop of $2 means if the stock tanked to 36.23 it will auto sell.
9/6 End of day
TNA 40.39 (DOW at 11139)
Trailing stop of $2 now means that if the stock tanks to 38.39 it is auto sold. (I can no longer lose on this trade).
9/7 Sell order kicked in at 2:pm CT
TNA $45 (DOW 11401) 17.68% profit
At this point the trailing stop was at $43 so even if the market tanked, it would have auto sold the stock for a 12.43% profit.
The main risk of this play is if the DOW does nothing or drops with no gain at all. But the total risk is $2 a share or a 5.23% loss. But as the stock rises the sell stop order rises to $2 below that price and never drops. The stop will only go up with the stock.
So..... The market kept going up and was getting close to the 11500 mark today and the top of my subjective channel. So I wanted to buy TZA to bet the market will go down. I waited for Bernanke to finish his talk to make sure he didn't bump the market. I also think that Obama speech inst going to do anything shocking, and the unemployment numbers are not going to shock positive. so, I bought TZA at 43.92 with a bracketed sell order.
9/8 Buy
TZA 43.92 (dow at 11337)
Bracketed sell order at $50. Means if the stock hits $50 it is auto sold. Note that $50 will mean to DOW will be around 11075ish.
Trailing stop of $2 means if the stock tanked to 41.92 it will auto sell.
9/8 End of day
TNA 44.70 (DOW at 11295)
Trailing stop of $2 (and the fact the stock reached 45.38) now means that if the stock tanks to 43.38 it is auto sold. (My total risk is now only .54 cents a share or 1.23% as opposed to the $2 or 4.55% risk)
So in the end I'm half hoping the DOW drops 150 to 200 points tomorrow or Monday.... If it does Ill be up another 13.8% And once the DOW hits into the 11000 area, Ill buy TNA again with another Bracketed trailing stop and hope for it to go up..... The worse thing that can happen to me is the stock market rallies tomorrow and my stop kicks in for a 1.23% loss.
There are a couple advantages of this method.
1. Its a Macro trade and not subject to a individual stocks quarterly report. (Though you can do the same Bracket trailing stop with a stock like Apple or any other stock).
2. It mitigates risk in the same way that options do, but at no cost of buying options.
3. It allows you to play the short market (TZA) with out the "unlimited loss" potential of a short.
4. For the most part its a play on feeling of the geo political environment that I'm in tune with anyway.
5. It lets the average guy jump into the volatility of today's market chaos like a day trader might with out having to day trade or to stress over missing a move.
I'm looking at the DOW and seeing what I think are dramatic changes into a channel. Right now I see a channel of a high of around 11500 and a low of 11100. This channel shifts and moves around and is highly subjective. In June / July I was calling it 12500 and 12100. I'm basically betting on the over all market going up or down inside the channel, but protecting myself with bracketed trailing stop orders. The risk of over all loss is pretty small in my opinion. I have been popping fast short term 10 to 20% gains, while only risking around 4% losses. And the losses mitigate as the stock goes up.
Again, TNA and TZA are triple leveraged ETF's and can be very risky. So this is not for the faint at heart. But they are also capable of 5turing very fast profits. For instance, today the DOW went down and TZA up 6.5%. I bought it my trailing loss has followed the stock up so that my worse loss is about 1% now. Ill explain more later, if you don't understand bracketed trading with trailing stops.
The trade above. I bought TNA at 38.23, and put in a bracketed sell order with a trailing stop. The bracket was $45 sell with a $2 trailing loss. It triggered yesterday at $45 for a 17.68% gain. This was basically a bet that the DOW would go up from its drop into the low 11k's. It did. But the most I would have lost was $2 a share and this risk was removed as the stop went up with the price of the stock automatically.
To do this all you have to do is buy the stock, and then put a bracketed sell order in right away, defining the high procei you want to sell at, and the trailing stop that will follow the stock up or trigger a sell if its hit. I use $2 for these stocks at around 40ish a share.
9/6 Buy
TNA 38.23 (dow at 10986)
Bracketed sell order at $45. Means if the stock hits $45 it is auto sold.
Trailing stop of $2 means if the stock tanked to 36.23 it will auto sell.
9/6 End of day
TNA 40.39 (DOW at 11139)
Trailing stop of $2 now means that if the stock tanks to 38.39 it is auto sold. (I can no longer lose on this trade).
9/7 Sell order kicked in at 2:pm CT
TNA $45 (DOW 11401) 17.68% profit
At this point the trailing stop was at $43 so even if the market tanked, it would have auto sold the stock for a 12.43% profit.
The main risk of this play is if the DOW does nothing or drops with no gain at all. But the total risk is $2 a share or a 5.23% loss. But as the stock rises the sell stop order rises to $2 below that price and never drops. The stop will only go up with the stock.
So..... The market kept going up and was getting close to the 11500 mark today and the top of my subjective channel. So I wanted to buy TZA to bet the market will go down. I waited for Bernanke to finish his talk to make sure he didn't bump the market. I also think that Obama speech inst going to do anything shocking, and the unemployment numbers are not going to shock positive. so, I bought TZA at 43.92 with a bracketed sell order.
9/8 Buy
TZA 43.92 (dow at 11337)
Bracketed sell order at $50. Means if the stock hits $50 it is auto sold. Note that $50 will mean to DOW will be around 11075ish.
Trailing stop of $2 means if the stock tanked to 41.92 it will auto sell.
9/8 End of day
TNA 44.70 (DOW at 11295)
Trailing stop of $2 (and the fact the stock reached 45.38) now means that if the stock tanks to 43.38 it is auto sold. (My total risk is now only .54 cents a share or 1.23% as opposed to the $2 or 4.55% risk)
So in the end I'm half hoping the DOW drops 150 to 200 points tomorrow or Monday.... If it does Ill be up another 13.8% And once the DOW hits into the 11000 area, Ill buy TNA again with another Bracketed trailing stop and hope for it to go up..... The worse thing that can happen to me is the stock market rallies tomorrow and my stop kicks in for a 1.23% loss.
There are a couple advantages of this method.
1. Its a Macro trade and not subject to a individual stocks quarterly report. (Though you can do the same Bracket trailing stop with a stock like Apple or any other stock).
2. It mitigates risk in the same way that options do, but at no cost of buying options.
3. It allows you to play the short market (TZA) with out the "unlimited loss" potential of a short.
4. For the most part its a play on feeling of the geo political environment that I'm in tune with anyway.
5. It lets the average guy jump into the volatility of today's market chaos like a day trader might with out having to day trade or to stress over missing a move.
Maul, the Bashing Shamie
"If you want to change the world, be that change."
--Gandhi
![[Image: maull2.gif]](http://bengtel.com/maull2.gif)
"If you want to change the world, be that change."
--Gandhi