Momentum trading requires guts. Take a look at the two day chart of SRS. There is a ton of money trading the trend of SRS. But I am not gonna sit here and tell you it’s easy. But if you want to be a great momentum trader you must take advantage of opportunites like SRS.
Often with momentum trading you must find ETF’s or stocks that are young. Often they are stocks that you have never traded. Often they are stocks that are trading at irrational prices. But that is the game. And you just have to dive in, learn the stock or ETF, and do the best you can. Your downside risk will be enormous compared to other stocks but your reward is much greater.
The hardest part about trading the SRS’s of the world is just to start. You take a look at the chart. You watch the movement of the inside market. And often your reaction is,”Who the hell would trade that nonsense!” But these stocks and ETF’s are actually easy to trade when they are in play. Easier than other stocks. They move so much that if you are careful, pick your spots, follow the trend, you will catch huge moves.
A good momentum trader needs to feel comfortable trading the uncomfortable. They need to search for the next momentum sector or stock. There will always be something in the markets offering momentum opportunities. And a good day for a momentum trader can make your whole month. But you have to have some guts. And you have to just force yourself into the SRS’s of the trading world.
I always chuckle when people think it was easy to trade during the Internet boom. I suppose after the first 6 months it was not that difficult. But the beginning sure was. I remember jumping into KTEL, they announced that they might sell music on the internet or something like that, and losing 18k learning the stock. Ouch! I remember paying the offer a point from the bid. That’s a little nerve racking. I remember how fast KTEL moved. It was four times faster than anything else I had ever traded. And this is what a momentum trader faces on a day like today. A day where you are trying to learn SRS and make some chops. But you just jump in and learn.
Best of luck with your trading.
6 Comments on “SRS”
Maybe you guys can help out. We’ve been having a conversation on stocktwits about how relevant technical analysis is on doubleshort etfs beyond an intraday basis.
Basically, the price of say SRS is derived from another etf and is not based on the actual supply and demand of the etf (there are imbalances of course, but not many). And the calculation to derive it changes every day.
So calculating support and resistance levels are not going to be exactly accurate beyond intraday.
What do you guys think?
Maybe you guys can help out. We’ve been having a conversation on stocktwits about how relevant technical analysis is on doubleshort etfs beyond an intraday basis.
Basically, the price of say SRS is derived from another etf and is not based on the actual supply and demand of the etf (there are imbalances of course, but not many). And the calculation to derive it changes every day.
So calculating support and resistance levels are not going to be exactly accurate beyond intraday.
What do you guys think?
Steve,
Great comment. Personally, I think that technical support and resistance levels from anything than a one day chart are irrelevant. Chart patterns on the one day chart do seem to work okay though.
Like you said, this is not a “real” stock. It does not have its own order flow all of the time. This is a momentum stock, so the concepts of overbought or oversold do not apply.
I will be blogging more about this later this weekend. Stay tuned.
Steve,
Great comment. Personally, I think that technical support and resistance levels from anything than a one day chart are irrelevant. Chart patterns on the one day chart do seem to work okay though.
Like you said, this is not a “real” stock. It does not have its own order flow all of the time. This is a momentum stock, so the concepts of overbought or oversold do not apply.
I will be blogging more about this later this weekend. Stay tuned.
Steve:
One should do their technical stuff on the regular non-leveraged ETF – IYR in this case.
If IYR has a bearish trend and you want to play it go buy SRS at whatever level it is at… since SRS’s level is irrelevant beyond a day.
Yep, I think that it might be actually good to start with one of these leveraged ETFs since one has to be much more sharp with these and trading a regular stock or non-leveraged ETF becomes easier after playing with these!!
Steve:
One should do their technical stuff on the regular non-leveraged ETF – IYR in this case.
If IYR has a bearish trend and you want to play it go buy SRS at whatever level it is at… since SRS’s level is irrelevant beyond a day.
Yep, I think that it might be actually good to start with one of these leveraged ETFs since one has to be much more sharp with these and trading a regular stock or non-leveraged ETF becomes easier after playing with these!!