During Dec-Jan our desk traded almost exclusively these two triple leverage ETFs. They provided plenty of opportunity as they would move a lot, had plenty of order flow in them and traded somewhat cleanly. We stopped trading them the moment FAZ went below $8 as the volatility died down considerably and felt like we were trading $AIG below $1.
Direxion announced recently a 10 & 5 reverse split in FAZ & FAS respectively, effective tonight after the close. Please see the prospectus supplent here for more details. Talk about a super chop!
We are almost certain that this will put these dopey ETFs back in play. For those of you momentum player and super short term scalpers these two stocks will provide a lot of opportunity again. It is time to review those tapes of how they traded a couple of months back.
I just spent the last couple of hours going over old tapes and doing plenty of visualization exercises to get me prepared for this free money festival tomorrow. With the big list of earnings companies not rolling in until mid next week these two will provide plenty of opportunity until then.
Do keep in mind though that these two ETFs do not behave like real stocks, there is no overbought or oversold condition. There are certain adjustments you must make to your normal trading. Yes from time to time you would be able to spot a great chart setup to play for the big move in these two. However, we found that there was a lot, let me repeat that, a lot more money to be made by scalping the nonsense out of them.
Get some rest. Bring your FAZ party hat for tomorrow. I can’t wait!
10 Comments on “FAZ Party Coming Back”
Hi Gman,
Beginner question: How do you scalp a stock like FAZ that has a very tight bid/ask spread?
Kapil
Hi Gman,
Beginner question: How do you scalp a stock like FAZ that has a very tight bid/ask spread?
Kapil
hmmm.. interesting.. how we can trade ETFs intraday.. its computer algorithmics.. less psyhology, more numbers.. we dont know real nature of this instruments..
hmmm.. interesting.. how we can trade ETFs intraday.. its computer algorithmics.. less psyhology, more numbers.. we dont know real nature of this instruments..
I am with kapil. Like to know how to trade these? Can you write another blog explaining this.
Thx Ross
I am with kapil. Like to know how to trade these? Can you write another blog explaining this.
Thx Ross
Kapil,
Great question about how to scalp FAZ. There are a bunch of different ways to do it. I prefer to play momentum in the stock. Others on our desk prefer to fade the crazy moves. It really does become a matter of preference. Nonetheless, there are a bunch of 10-15 cents moves to capitalize in. We will be posting a couple of sample videos on our blog soon on how we scalp it. Stay tuned.
gman
Kapil,
Great question about how to scalp FAZ. There are a bunch of different ways to do it. I prefer to play momentum in the stock. Others on our desk prefer to fade the crazy moves. It really does become a matter of preference. Nonetheless, there are a bunch of 10-15 cents moves to capitalize in. We will be posting a couple of sample videos on our blog soon on how we scalp it. Stay tuned.
gman
Thanks Gman.
Thanks Gman.