Markets I Trade: July 16, 2019

In my non-registered account I am developing my trend following strategy continuously. I don’t pretend to have all the answers. I am sharing this ongoing learning journey with you in this series.

I am always exploring new methods of trading, new markets to access, and better control of risk and opportunities. My main goal is to avoid large losses while achieving reasonable returns over time. I try to focus on trades which I believe have good reward-to-risk ratios.

You will see me trade index products, currencies, and commodities primarily with leveraged ETFS, futures contracts, and LEAPS options for maximum capital efficiency. I try to risk small amounts of capital with each trade targeting high return multiples on that risk.

One thing that is easy to notice is most weeks have no action and trading is quite boring. The equity based positions move in relative tandem. Volatility positions are the only place where exciting things seem to happen more frequently.

I've added stop levels for the leveraged ETFs which are based on momentum signals. The stop levels are estimates since I am translating data from a signal ETF which is different from the traded ETF.

Currently my exposure to stocks in the trading account is around 38 percent. Most of my cash is in BSV, a short-term bond ETF.

*Information on this post is dated at market close, Monday, July 15, 2019.

VXX: Options

On May 7, I purchased a call ratio backspread for a small account credit when VXX was trading at approximately $29 per unit. This is a hedged position. VXX is now in a downtrend and my trade is showing a small profit. I closed this position for a $530 profit on July 9.

QQQ: LEAPS Options

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Momentum Factor: +10

I opened a position in QQQ on May 17 with a purchase of $160 call options when QQQ was at $184 per unit. My trade is showing a small profit right now (nearly equal to my risk).

Gold: UGLD ETF

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Momentum Factor: +10

I opened a half position in gold on May 29 with a purchase of the 3x leveraged ETF UGLD at a price of $91.15 per unit. With continued upside momentum I moved to a full position on June 3 when UGLD was at around $99.40 with an average position price of $93.20. My stop is up to $90 per unit. My entry was based off a signal in GLD.

Brazil: BRZU ETF

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Momentum Factor: +10

I opened a full position in Brazilian stocks on June 7 with a purchase of the 3x leveraged ETF BRZU at a price of $30.25 per unit. My stop is currently set at around $27 per unit. My entry was based off a signal in EWZ.

Europe: EURL ETF

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Momentum Factor: +8

I opened a nearly full position in European stocks on June 7 with a purchase of the 3x leveraged ETF EURL at price around $27.30 per unit. My stop is currently set at about $23 per unit. My entry was based off a signal in VGK.

India: INDL ETF

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Momentum Factor: +8

I opened a full position in Indian stocks on June 18 with a purchase of the 3x leveraged ETF INDL at price around $73.80 per unit. My stop price is up to approximately $63. My entry was based off a signal in INDA. I'm close to the point where I need to trim down my position a bit, we'll see where momentum goes from here.

Soybeans: YK Futures

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Momentum Factor: +5

I opened a full position in soybean futures on June 24 with a purchase of mini soybean futures contract at price around $9.30 per bushel. At that time the momentum was at +8. My initial stop price is $8.45 per bushel.

GLD: Options

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Momentum Factor: +10

On June 26 I opened a put ratio backspread trade for a small credit on GLD when it was trading at approximately $133. This is a hedged position that will only lose money (within my maximum limit) if the price of GLD is between $120 and $130 per unit.

FXI: Options

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Momentum Factor: +2

On June 27 I purchased in-the-money call options on FXI when it was trading at $42.60. FXI has been climbing in the momentum score in the past few weeks as it pulled out of the low in the beginning of June. A move towards $45 will give it full momentum, but so far momentum has been falling since my entry.

VXX: Options

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Right-click to expand image.

Momentum Factor: -10

On May 7, I purchased an out-of-the-money call spread when VXX was trading at approximately $22.75 per unit. This position is effectively a low cost hedge against market turmoil.

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