Free Report: Increase Your Gains Trading ETFs with Leveraged ETF PowerRatings
Scaling-in to positions when trading both leveraged and non-leveraged exchange-traded funds is a staple of high probability trading. While all our strategies are robust enough to be traded successfully without adding to positions as PowerRatings are upgraded and edges grow, taking advantage of scaling-in can mean the difference between a good trade and a great trade.
Click here to download “Free Report: 3 Ways to Increase Your Gains Trading Leveraged ETF PowerRatings.”
So how do scaling-in strategies work for traders trading leveraged ETF PowerRatings? Look at the example below.
Above: PowerRatings traders who opened an initial position when the ^UCO^ earned a Leveraged ETF PowerRatings upgrade to 9 and then added to that position when the fund was further upgraded to 10 were able to lock in gains of more than 3% only a day later.
By buying an initial unit once a leveraged ETF earns a PowerRatings upgrade to 9, for example, and then by buying a second unit when that same fund earns a further upgrade to a 10, leveraged ETF PowerRatings traders accomplish two important things.
First, this strategy lowers the cost basis. Buying one unit at $25 with a leveraged ETF PowerRating of 9 and then buying an additional unit at $22.50, for example, after the fund has earned a leveraged ETF PowerRatings upgrade to 10, means that the average cost of the trade is $23.75.
Traders who add an additional unit on a subsequent 10 rating for a three-part scale-in can lower their cost basis even further.
Second, lowering the average cost of the trade makes it that much easier for the market to surge beyond the average cost of the trade as it bounces back. This can allow traders to lock in gains in a consistent, high probability fashion. By “high probability”, I mean per trade accuracy rates of 70% and above.
Here’s another example of a scale-in trade with a leveraged ETF. An initial position is taken when the leveraged ETF earns a leveraged ETF PowerRatings upgrade to 9. Then a second position is taken when the fund earns a further upgrade to 10.
Above: This spring, leveraged ETF PowerRatings traders who bought into the market for the ^DGP^ when it earned a PowerRatings upgrade to 9 were able to add an additional unit two days later when the fund was upgraded to a 10, locked in gains two days later as the position gained more than 4%.
For simplicity’s sake, the exit I have used is when the fund’s Leveraged ETF PowerRating drops below 8. This is not the most robust exit for short term trading in exchange-traded funds, and I don’t recommend it as part of a trading strategy. But it is a helpful tool to show the relative performance of leveraged ETFs after they earn top leveraged ETF PowerRatings upgrades.
Want to learn more? Click here to download our special Free Report: 3 Ways to Increase Your Gains Trading Leveraged ETF PowerRatings.
Leveraged ETF PowerRatings: Quantified. Backtested. Free for a Week.
Beyond the simplicity of being able to scan simply for 9s and 10s, leveraged ETF PowerRatings provide the average trader with the same kind of sophisticated, quantified and backtested trading resources that professional traders have used for years. Think of PowerRatings has having your own research desk, analyst team and MIT-educated quant specialist all rolled up into a single number available to you after the market closes and before the market opens every day.
If you’ve been looking for leveraged ETF trading strategies in all the wrong places, why not give our quantified, backtested leveraged ETF PowerRatings a try? Our highest rated leveraged ETF PowerRatings funds have made significant short term gains nearly 80% of the time. We know of no other resource for short term trading in ETFs – either leveraged or non-leveraged – that backs up its strategies with rigorous, on-going research that relies on quantified, backtests involving thousands of simulated trades.
Whether you trade 2x leveraged ETFs like the ^SSO^ and the ^FAZ^ or triple-leveraged ETFs like the ^ERX^ and the ^TNA^ – Leveraged ETF PowerRatings may be just what you need in order to take your ETF trading to the next level.
To get started with leveraged ETF PowerRatings – and to learn more about advanced strategies for potentially maximizing your gains with leveraged ETFs – click here to download our latest report today: “Free Report: 3 Ways to Increase Your Gains Trading Leveraged ETF PowerRatings.”
David Penn is Editor in Chief at TradingMarkets.com.