Lessons

1. If VIX is under 26, buy the dip. If VIX is over 26, sell the rip.

2. Always trade in the direction of the larger trend. Find the strongest trend in your time period.

3. Nothing as bearish as a failed breakout. Nothing as bullish as a failed break down.

4. Don't worry about the last dollar. Take your money and go to the beach!

5. No more than four positions at a time. Preferably 2-4. Scope out others. Pick the strongest.

6. Buy the strongest; sell (short) the weakest.

7. Nothing is guaranteed. Nothing.

Saturday, March 31, 2012

Inverse ETFs

In my opinion, you should NOT use inverse ETFs to trade against the larger trend, even for short periods of time. It is too risky and too hard. Trading should be easier than that.

The exception is when the larger trend is at a crossroads or changing. Then you can make a few bucks by betting against the larger trend at extremes.

I have made a lot of money by using inverse ETFs. If I'm in a bull market, and I buy the dip (at support) with them, I will make money. Also vice versa.

It's all about reading the larger trend correctly. Right now, IMO, the intermediate-term (3-9 month) trend is long, the short-term trend (1-2 month) is uncertain and the the very short-term trend is uncertain (1 week). So I am looking to buy the dips for an intermediate term long.

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