But, you need to have asset allocation strategy, otherwise it will wreck your investments. I will give you simple logic (sample only)
Assume you hold 90% QQQ, 0% TQQQ, 15% cash.
When dips like this Monday (appx 3% from peak), invest 6% cash (from 15%) into TQQQ. If QQQ market dips 7%, invest full 14% cash into TQQQ
Now, you have 90% QQQ 6% TQQQ 4% cash. When market jumps back to original level, sell all TQQQ move to cash.
You need to stay invested and get the benefit of TQQQ during every dip.
Easier to say, but hard to practice as we may have fear of losing the money when deep dip happens(down down 950 points).
Write down the rules and follow the rules. You need to test this using excel sheet before getting into action. This is algorithmic way, just a pattern.
BTW: I am not a financial advisor nor stock advisor.
Your description is not complete. If QQQ continues to dip, when to cut loss? if it rebounds, when to take profit? Are you omit the part on using tools such as EWT, trend lines, S/R lines, etc to determine the cut off and exit criteria.
Hah, well, I know the basics of many TA/EW but I honestly donāt want to go too deep into it. The problem with TA/EW is a lot of times, you get married to the concept and prediction, and you canāt stay nimble. Iāve only started trading aggressively late last year so for now, staying flexible and riding the momentum is what works for me.
Iām very open to many changes that happen in the market at this pointā¦but truth to be told, itās a feeling more than anythingā¦but they are mainly driven by social media which are backed by all kinds of TA, EW, order flow, option flow, momentum flow, sentiment, etc. If I canāt get a feel for it, thatās when I stay conservative and wait.
Even with TA/ EWT, you need the feelings. For EWT, many valid counts, how to tell which is the correct count? There may be a scientific way to determine but I am not aware of it. So use feeling I find feeling works only if you trade often e.g. I tried day trading for a few weeks, then stop because got tired (too old), after stop trading for awhile, I find I lost the feeling of how to day trade.
Having said above, if you want to automate it, you need rules Computers only understand rules. One key pro of automation is it frees you to do other thingsā¦ somehow @Jil seems to get even more busyā¦ I have to wonder.
Just like to state here again, I am a true blue buy n hold (hopefully forever) investor. Not a day trader, not a swing trader, and not a position trader. Trading is for entertainment.
Key pro of buy n hold? Every day do nothing. Is become kind of boring so need to trade to get some excitement and entertainment.
Simple. I am not a nimble trader. Afk often and sometimes didnāt look at the screen for the whole day.
Approach like a buy n hold investor. Remember how I hold 4500 TQQQs during the volatile period, many bloggers have quietly exited while I still hold it till it is fairly green before I sold them. Have I hold till now, make double money. I think Pandaās overconfidence of an EPIC decline in May shook me out of that TQQQ positionā¦ should have stuck to my EW readingā¦ anyhoo, my decision.
Btw, my trading portfolio is net long Not net short, in case you have presumed as such.
What I showed here is not TA/EW, but a simple algorithmic (logic) to stay invested in QQQ and get benefited by TQQQ when there is a good dip. This is just asset allocation or rebalancing techniques.
full 15% not 14% right? => It is 14% (or whatever individual logic). I just showed 2% investment of TQQQ every 1% drop of QQQ. When market comes back, TQQQ jumps 3x than QQQ. The issue I showed is 7% dip. In case of 8% or 9% or 10%, Your cash is limited to 15%, but if I were at that situation, I will sell some QQQ to rebalance QQQ:TQQQ.
Your description is not complete => I just showed a sample, not completely written proven logic.
Are you omit the part on using tools such as EWT, trend lines, S/R lines, etc => This is TA which is difficult for common investors.
If QQQ continues to dip, when to cut loss? No cut loss. Concept is market comes up back like now. In stead of buy/hold, this is rebalance QQQ with TQQQ when dips.
Again, I repeat: This is sample, not 100% proven logic, must be properly defined/written by each individual (based on the comfort level) and must be back tested by excel.
Are you in panic mode? Canāt sleep because everyday worry that the EPIC bear market predicted by Panda would come true. You should either do some mediation to calm yourself or buy some hedges such as SPXU or SQQQ or puts (at least 3 months expiry) of SPY and QQQ.
While waiting for the Pandaās EPIC bear market, status of my trading portfolio isā¦
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So long the ATH is not taken, he is correct. Are you expecting a straight line down? Hope it is, it would then be an one day affair
In case @manch didnāt read above. After writing above, I thought about it. I think he believed strongly in cycles. His cycle analysis indicates this week is THE week, so he chose the most bearish count as preferred count. Btw, his cycle analysis that May is the month is wrongā¦ he still believe in cycle analysis, guess is hard to Un-believe
But honestly, while it is a bit scary to commit real money into trying to beat the market with a QQQ - TQQQ balancing strategy, I think it may be worth trying at least with a little bit of wager fundā¦
What I have given to you is very simple and workable plan, except during a recession. Enough back testing will help clear your doubts.
On a parallel estimate, I have asked my partner to work on such logic to find out best ratio (1%,2%,5% or 10%) between QQQ:TQQQ, but the results will be limited to me and my partner as IP.
Even he did not like me posting such ideas in the internet publicly as he feels it is our own intellectual property.
Thanks @Jil for openly sharing your logic with the group and we all newbies find it useful.
A newbie question: what is the benefit of holding QQQ? One can just apply your TQQQ buy / sell logic based on QQQ using whatever cash position that they are comfortable. Right?
I find feeling works only if you trade often e.g. I tried day trading for a few weeks, then stop because got tired (too old), after stop trading for awhile, I find I lost the feeling of how to day trade.
