Gold dumps $48 in 1-minute

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Another thing that seems to be misunderstood about volatile etf's/stocks is that those stocks moving 30% in one direction is not the same as less volatile stocks moving that same percentage. Because, well, these instruments are...volatile.

If they move 10 times as much as your favorite calm stock, then a 30% move in the volatile stock is the "same" as a 3% move in your favorite calm stock. And just as your calm stock can recover from a 3% move in the wrong direction, so too can the volatile stock recover from a 30% move in the wrong direction.

:rolleyes:
 
userque said:
Another thing that seems to be misunderstood about volatile etf's/stocks is that those stocks moving 30% in one direction is not the same as less volatile stocks moving that same percentage. Because, well, these instruments are...volatile.

If they move 10 times as much as your favorite calm stock, then a 30% move in the volatile stock is the "same" as a 3% move in your favorite calm stock. And just as your calm stock can recover from a 3% move in the wrong direction, so too can the volatile stock recover from a 30% move in the wrong direction.

:rolleyes:
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Yes, but again, you better be on the right side of both those trades because if not... you'd be down 76% and need 400% to recover... sux
 
I bought some NUGT after hours for 3.51. Couldn't resist. This won't be a day trade. More like 1 to 2 weeks. There are some extreme oversold readings.

This was in SentimenTrader Home last Thursday (7/16)...

Precious metals have been taking a hit lately, and that has reflected on the miners. Every stock in the HUI Gold Bugs index has traded below its 10 - , 50 - and 200 - day moving averages for the past two days, and on both days more than a third of the stocks have reached 52 - week lows. In the history of the index, this has occurred on 9 other days, clustered in four time frames (early September 2008, mid - October 2008, mid - May 2012 and late October 2014). They all occurred within several days of 10% rallies in HUI and other indexes of gold miners. They should be getting a reprieve soon, with any heavy selling in the coming day(s) likely to be exhaustive and quickly reversed.
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Like I said, this was 3 trading days ago and now we've gotten the "heavy selling."
 
tsptalk said:
I bought some NUGT after hours for 3.51. Couldn't resist. This won't be a day trade. More like 1 to 2 weeks. There are some extreme oversold readings.

This was in SentimenTrader Home last Thursday (7/16)...



Like I said, this was 3 trading days ago and now we've gotten the "heavy selling."
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Nice! Looks like they were spot on.
 
exnavyew said:
FWIW:

A Ratio Worth Respecting

A Ratio Worth Respecting | Slope of Hope
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That ratio is now 2.01 to 1.

But beware the man who gives market advice who uses a bear as his avatar. The guy who wrote that article uses this...
6_YTkoDT_t
 
RealMoneyIssues said:
Yes, but again, you better be on the right side of both those trades because if not... you'd be down 76% and need 400% to recover... sux
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Word Problem:

Suppose you have a sufficient balance (six figures). You trade $10,000 per trade.

First trade, you're down 76%, or you now have $2,400 (plus six figures).

1. What dollar amount to you need to recover? $7,600!

What percentage is that? About 400%? NO.

It would be about 400% IF you were only trading with the $2,400! But, guess what? you will be trading with $10,000 on your next trade! So guess what else, you'd only need 76% to recover... or a lower percentage if you trade with more than $10,000!

When you're down to a few chips at the poker table, you don't hope for that 1000% come back, you reload up to the table max! You sit at the $200 tables (for example), not the $1000 tables even though you have over $1000 available to your atm card. It's all about money management.

It's not about the volatility of the instrument--it's about the money management. Now the above example could be re-jiggered so that the percentages are based upon the total account balance...or the total net worth of the trader. Point being folks trying to judge others by only 'what' they are trading clearly don't know a lot (or maybe enough) about trading, or have ulterior motives. (Not referring to anyone in this forum!)

Everyone can't trade volatile stocks, but not because they're volatile, but because they don't know how.
 
userque said:
Another thing that seems to be misunderstood about volatile etf's/stocks is that those stocks moving 30% in one direction is not the same as less volatile stocks moving that same percentage. Because, well, these instruments are...volatile.

If they move 10 times as much as your favorite calm stock, then a 30% move in the volatile stock is the "same" as a 3% move in your favorite calm stock. And just as your calm stock can recover from a 3% move in the wrong direction, so too can the volatile stock recover from a 30% move in the wrong direction.

:rolleyes:
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For any 1 day, yes. But for more than one day it is not the same since leveraged ETFs experience decay that whatever they track does not.
 
userque said:
I don't think two days would be a big deal. Should we run the numbers?
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Nope 2 days wouldn't be a "big deal" either. Maybe not even a week, or two, or a month. But the longer it goes, the worse it gets, and the effect adds up. Someone can just look at a chart of any leveraged ETF that tracks the VIX to see how drastic it can be. Granted that is probably one of the worst case scenarios... but so is NUGT/DUST... just look at the 5 year chart of NUGT
 
k0nkuzh0n said:
Nope 2 days wouldn't be a "big deal" either. Maybe not even a week, or two, or a month. But the longer it goes, the worse it gets, and the effect adds up. Someone can just look at a chart of any leveraged ETF that tracks the VIX to see how drastic it can be. Granted that is probably one of the worst case scenarios... but so is NUGT/DUST... just look at the 5 year chart of NUGT
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Yeah, I guess if you were trying to buy and hold NUGT, it would be a concern.
 
NUGT up 4.72%, DUST down 7.76%... what a joke.

A couple of years ago I wrote about a system that can not lose, but the boys won't let you do it...

Just short both NUGT and DUST and hold. But try finding shares to short. It ain't happening. At least on Scottrade. I tried for months.
 
tsptalk said:
NUGT up 4.72%, DUST down 7.76%... what a joke.

A couple of years ago I wrote about a system that can not lose, but the boys won't let you do it...

Just short both NUGT and DUST and hold. But try finding shares to short. It ain't happening. At least on Scottrade. I tried for months.
Click to expand...

Should be:
GDX +2.62%
NUGT +7.86%
DUST -7.86%

Are you sure NUGT is a 3x Bull ETF? :eek:
 
Gold just puked again - hit 1073 and change in over night futures trading, before bouncing. Is this the test of the lows (overnight low was about 1080)? Will it hold?
 
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