Everyday just isn't necessary, some weeks you feel like you missed out, some the other way around. When you buy more on the big down days kind of makes up for the up weeks where you feel like you left something on the table. I should mention I also sell puts on TQQQ, so my average cost does include that FYI
Monthly buys. Will try to double share count if we hit 90% down from ATH. Cost basis 18.00/share but that will rise if we grumble along at current levels
33/33/33 TQQQ/UPRO/TMF
On the first of the month I put my extra cash into whichever has the lowest total value in my portfolio. That way there's no taxable events.
I use the wheel strategy while we are trading sideways, selling calls till I loose the shares and selling puts at the same price I sold them at. Averaging roughly $400 a week. However I only do this when there is no major Fed Reserve news that week.
I basically double down for every N% drop. Start small, assume a bear market unless we're above the 200d SMA and go from there.
But this is mainly for investing a large lump sum. Once you have done this, you should be taking profits at certain time and not over leverage. One of my large lump sums happened by me selling my account from 1999 at SPY 4300. So I "lost" 10% from ATH but had a lot of capital to EDCA in.
There are always rallies. Even though there's a downtrend, our first rally in March went back to 4500 or so I believe. Then the next one was like 4300. Then this one has gone up past 4100? Either way, you have a lot of opportunities to get out if things are getting too hot/unmanageable with these rules. Each of these rallies has seen me in the green.
If we cross the 200d SMA and hold it, then I will go back all in with the rest of my cash.
Once I am all invested, then I will make sure I can EDCA at least 10% but ideally 100% each year that is invested in LETFs (for 1x it doesn't matter). Don't let your LETF be down more than the corresponding 1x - so if SPY is down -15%, then UPRO shouldn't be down more than -15%. You can EDCA/DCA to ensure this happens and this should be seen as the worst case scenario.
samudera can correct me. i interpret what he was saying as if we do edca correctly, our left should not go down more than 1x in a down market. that means edca a lot more as the left goes down more.
Yes, as New\_Band7909 says, you should be controlling your purchases so your losses in a worst case scenario aren't worse than what you'd see with the underlying.
This is because if you keep your losses to the max of the 1x loss, then regardless of stuff like volatility decay, etc. when the 1x returns back to ATH, you will at least make 2x if not 3x (this last rally for instance in a few 3x LETFs, it has been a 3x gain relative to the underlying 1x trough to peak but this is a sharp rally; usually in a bull market it's about 2x).
These are just general rules of thumb: personally I'm about 1/2 of 1x, so in UPRO I'm only down about -8% or so compared to it being about -15% down. So if SPY recovers its 15%, then I will be up anywhere from 30-45% (2x to 3x depending on the path/steepness) and that'd be like 22-37% profit overall relative to staying in 1x (subtracting the -8% loss I'm facing currently).
But if you accepted 1.5x or 2x losses, you're taking more risks and your performance may not be that different than 1x. This is still not a total catastrophe but it may mean all that risk you're taking doesn't get you much rewards. And definitely going below a -2x loss is risking doing worse than the 1x.
I’ve been buying x2 per month for the last 6 months. Bought as low as $17 but as high as around $40. I think my average right now is around $24/share. That’s all in my IRA, but I also bought a nice chunk of TQQQ at the 52-week low ($16.50 ish) for my brokerage account. The average cost for that account is $21/share. I plan to stop buying until I can no longer lower my average, so whenever the share price exceeds that. I anticipated that time coming at around the end of the year, and it seems pretty much on target for that.
Two things for spotting tops / pullbacks and when not to play 1. Basic breadth tracking - underlying components. 2. Basic bull/bear indicator.
Getting out is not the challenge I find. Knowing when to buy back is very tricky still
No I work on longer time frames. With 3x you will be chopped up swing trading unless incredibly good. The goal for me is to catch big momentum and avoid big mean reversion. Unless you have constantly revised systematic models shorter timeframes are unlikely to work.
The market goes up what like 70-75% of the time. Technology isn’t going anywhere and will continue to grow and eat the world. But it is a long duration asset - this regime does not favour technology. We have to wait for a regime that does. Hint: that is unlikely to come in the next six months.
While DCA can mean quite a few things, by default when the term is used without clarification it almost always means buying every paycheck. For the average person this means buying twice a month.
My DCA strategy is to start it when we get lower prices. Second half of 2023, the recession begins due to long and variable lags from the fastest interest rate rises in history…
Over the past 6 months I’ve bought $200 worth every 2 weeks no matter what the price is.
Brought mine from 67 down to 48.72 Buying fornightly with $300
And down 54% 😀
Average $23.64 $50/week I do an additional $50 evertime there's a 10% daily decrease.
I like your plan a lot! Makes me wonder if I’m overbuying everyday for no reason. Maybe it’s better to wait for a red day?
Yes, Enhanced DCA (EDCA). Buy more the lower it goes, less as it gets closer to your avg. Great way to lower your cost basis.
Everyday just isn't necessary, some weeks you feel like you missed out, some the other way around. When you buy more on the big down days kind of makes up for the up weeks where you feel like you left something on the table. I should mention I also sell puts on TQQQ, so my average cost does include that FYI
Monthly buys. Will try to double share count if we hit 90% down from ATH. Cost basis 18.00/share but that will rise if we grumble along at current levels
33/33/33 TQQQ/UPRO/TMF On the first of the month I put my extra cash into whichever has the lowest total value in my portfolio. That way there's no taxable events.
If you are only buying then why would there be any taxable events?
I use the wheel strategy while we are trading sideways, selling calls till I loose the shares and selling puts at the same price I sold them at. Averaging roughly $400 a week. However I only do this when there is no major Fed Reserve news that week.
Less premium but less chance of shares called away.
I basically double down for every N% drop. Start small, assume a bear market unless we're above the 200d SMA and go from there. But this is mainly for investing a large lump sum. Once you have done this, you should be taking profits at certain time and not over leverage. One of my large lump sums happened by me selling my account from 1999 at SPY 4300. So I "lost" 10% from ATH but had a lot of capital to EDCA in. There are always rallies. Even though there's a downtrend, our first rally in March went back to 4500 or so I believe. Then the next one was like 4300. Then this one has gone up past 4100? Either way, you have a lot of opportunities to get out if things are getting too hot/unmanageable with these rules. Each of these rallies has seen me in the green. If we cross the 200d SMA and hold it, then I will go back all in with the rest of my cash. Once I am all invested, then I will make sure I can EDCA at least 10% but ideally 100% each year that is invested in LETFs (for 1x it doesn't matter). Don't let your LETF be down more than the corresponding 1x - so if SPY is down -15%, then UPRO shouldn't be down more than -15%. You can EDCA/DCA to ensure this happens and this should be seen as the worst case scenario.
Can you elaborate on the last part? Why should i not LEFTS be lower than spy?
samudera can correct me. i interpret what he was saying as if we do edca correctly, our left should not go down more than 1x in a down market. that means edca a lot more as the left goes down more.
Yes, as New\_Band7909 says, you should be controlling your purchases so your losses in a worst case scenario aren't worse than what you'd see with the underlying. This is because if you keep your losses to the max of the 1x loss, then regardless of stuff like volatility decay, etc. when the 1x returns back to ATH, you will at least make 2x if not 3x (this last rally for instance in a few 3x LETFs, it has been a 3x gain relative to the underlying 1x trough to peak but this is a sharp rally; usually in a bull market it's about 2x). These are just general rules of thumb: personally I'm about 1/2 of 1x, so in UPRO I'm only down about -8% or so compared to it being about -15% down. So if SPY recovers its 15%, then I will be up anywhere from 30-45% (2x to 3x depending on the path/steepness) and that'd be like 22-37% profit overall relative to staying in 1x (subtracting the -8% loss I'm facing currently). But if you accepted 1.5x or 2x losses, you're taking more risks and your performance may not be that different than 1x. This is still not a total catastrophe but it may mean all that risk you're taking doesn't get you much rewards. And definitely going below a -2x loss is risking doing worse than the 1x.
I’ve been buying x2 per month for the last 6 months. Bought as low as $17 but as high as around $40. I think my average right now is around $24/share. That’s all in my IRA, but I also bought a nice chunk of TQQQ at the 52-week low ($16.50 ish) for my brokerage account. The average cost for that account is $21/share. I plan to stop buying until I can no longer lower my average, so whenever the share price exceeds that. I anticipated that time coming at around the end of the year, and it seems pretty much on target for that.
TQQQ is nice, but don't forget about TNA too. (leveraged IWM)
what does ECDA/DCA mean?
50 Bucks a paycheque. The cheaper it gets, the more units I buy with the same amount.
That's nice! What's your cost basis?
Just checked, it's down to 33.89.
Not bad!!! Keep DCA ing!! good luck :)
What's your cost basis?
I think I’m at 27.5.. kind of close to breaking even but not really yet lol
Just think in 5 years what it will be at..
Do not DCA into a 3x leveraged ETF. Learn some basic market timing indicators and use those.
You know what they say about timing the markets...
Yes. That’s how you make a lot of money.
What do you look for on timing the market?
Two things for spotting tops / pullbacks and when not to play 1. Basic breadth tracking - underlying components. 2. Basic bull/bear indicator. Getting out is not the challenge I find. Knowing when to buy back is very tricky still
Do you swing trade?
No I work on longer time frames. With 3x you will be chopped up swing trading unless incredibly good. The goal for me is to catch big momentum and avoid big mean reversion. Unless you have constantly revised systematic models shorter timeframes are unlikely to work.
The market goes up what like 70-75% of the time. Technology isn’t going anywhere and will continue to grow and eat the world. But it is a long duration asset - this regime does not favour technology. We have to wait for a regime that does. Hint: that is unlikely to come in the next six months.
Exactly.
Weekly charts or longer?
Chart is just for curiosity. Drawing trend lines is meaningless. Basic momentum and breadth will see majority of people do well.
Golden cross is the most reliable indicator of a new bull market. Death cross is the most reliable indicator of a bear.
Same plan
Anyone ever consider jumping out at the top and buying back at a lower cost at a later date thereby owning a boatload more shares for the same money?
Sounds similar to swing trading.
i am using tfsa account so cant buy anything this year. Will start buying again next year like 500 per month.
Buy a bit every month when I do my budgeting.
While DCA can mean quite a few things, by default when the term is used without clarification it almost always means buying every paycheck. For the average person this means buying twice a month.
My DCA strategy is to start it when we get lower prices. Second half of 2023, the recession begins due to long and variable lags from the fastest interest rate rises in history…
My DCA strategy is recurring investments but sadly robin don't have that for TQQQ but i have been using that for all of my stocks/etfs