Monday, July 6, 2009

Making it easier to calcuate stops for leveraged ETFs

Markets are fluctuating and leveraged ETFs are gyrating. If you own any of these ETFs, have you examined your stop levels lately?

Back in April I introduced the TradeRadar stop calculator. It emphasized the fact that leveraged ETF performance is driven by the action in an underlying index. It was pretty basic in that it translated movement in the underlying index into changes in the leveraged ETF but it required the user to determine the appropriate underlying index or ETF and to enter most recent prices as well as target stop levels.

Major improvements --

I have now rectified some of the major weaknesses and made the calculator a lot easier to use. Here are some of the new features:

  • All the ETFs from ProShares and Direxion are now listed in a drop down. Pick a leveraged ETF and the calculator automatically identifies the appropriate underlying index or ETF that is based on that index.
  • The calculator retrieves the most recent prices for both the leveraged ETF and the underlying index or ETF and populates the form automatically.
  • The calculator automatically detects whether the leveraged ETF is 2x or 3x and whether it is a long or short ETF.
  • When trying to determine stops, it is very helpful to be able to see the chart of the leveraged ETF and the underlying index. The calculator automatically creates two links to the site. In separate windows or tabs, a user can now display a chart of the underlying index/ETF as well as a chart of the leveraged ETF.
Ease of use --

Since I use the TradeRadar Stop Calculator myself, I think I've been able to identify some of the major shortcomings and, hopefully, address some of the major aspects of ease of use. Essentially, the calculator retrieves all the basic data needed to set up the calculation. It is up to you, however, to use the charts to determine an acceptable stop level on the underlying index. The TradeRadar calculator takes it from there.

If you haven't seen the TradeRadar Stop Calculator before, check it out. If you have used it before and found it lacking, I urge you to take a look at the new version.

As always, feedback and comments are welcome.

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