Thursday, September 22, 2016

Update on UPRO and SPY Equity Trade 9-22-16

I recently made a post regarding a bullish ETF trade on UPRO or SPY with the trade stats suggesting an exit at the close of 9/21/16.  That exit came yesterday and was a profitable exit.

However I personally did not exit the position because of new scans suggesting further upside probability.  I looked at a few different angle of the market action, but 1 scan that looked at:

  •  3 closes below the open in a row 
  • with the daily fast stochastics below 30 
  • and the yearly moving average of price pointing up
This produced a forward MAX gain in the next week that was over twice as large as the MAX loss.  There was a highly profitable play of closing the trade 5 days later (in this case at the close of next Tuesday Sept 27th).

So I have kept the same stop and limit sell orders that I originally had placed, but did not close the trade yet.  

I show this as an example of using new market information to adjust trade strategy on the equity side where there is no expiration.

For instance, a certain scan may have a nice forward return on average, but when you look at trades that move sharply in the new expected direction in the first few days, they may have a very profitable forward expected return over the next few weeks or months based upon the back test.  So in these cases, it would make sense to use the newly generated back test information to adjust stops, and continue to hold longer for larger probable gains as a leg up or down appears likely to continue.

If you knew you were in the midst of a probable trending move, there would be no desire to exit.  But you never know.  You have the past information as probabilities, and go with what it suggests.


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