Skip to main content

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 StockCharts.com 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.
Labels:

Comments

Post a Comment

Popular posts from this blog

Time to be conservative with your 401K

Most of the posts I and other financial bloggers write are typically focused on individual stocks or ETFs and managing active portfolios. For those folks who are more conservative investors, those whose main investment vehicle is a 401K, for example, the techniques for portfolio management might be a little different. The news of stock markets falling and pundits predicting recession is disconcerting to professional investors as well as to those of us who are watching our balances in an IRA or 401K sag. What approach should the average 401K investor take? Let's assume that the investor is contributing on a regular basis to one of these retirement accounts. There are two questions that the investor needs to ask: 1. Should I stop putting the regular contribution into stocks? My feeling is that investors making regular contributions are being handed a present by the markets. Every week the market goes down, these investors are lowering their average cost. When markets reco...
7 comments
Read more

The Trouble with Trend Reversal Indicators

Many of us use various trend reversal indicators to time our trades. Our desire is to determine when prices have changed direction so that we can ride the new trend. Why doesn't it always work out? The first reason, of course, is that unforeseen events often drive prices in unexpected directions. That is something we can't change and it often makes all of us technical traders crazy. On the other hand, sometimes an unforeseen event is a prelude to a new trend. A stock spikes up on a what seems to be a one-time piece of good fortune and soon falls back. Does it start making its way back up or does it resume a previous down trend? The conflict within trend reversal indicators is that, though they can definitely tell when prices change direction, they suffer from two problems. One, they often can't determine how significant that move in prices actually will be. Two, they are often lagging indicators. As such, they can be late in providing a signal, sometimes leading the investo...
1 comment
Read more

Brazil - in a bubble or on a roll?

A couple of years ago, no one recognized the real estate bubble even though it was under everyone's nose. Now, analysts and bloggers are seeing bubbles everywhere they look. One of them, they say is in Brazil whose Bovespa stock market index has doubled in the last 12 months. Does the bubble accusation hold water? I don't think so and here are 7 reasons why Brazil is by no means a bubble economy: Exports have held up over the past year thanks to demand from China for Brazil's soya exports and iron ore. This was helped by the the Brazilian government's drive to improve trade links with Asia and Africa. Export diversification, spurred by a more active trade policy and increased focus on "south-south" trade under current president Lula, helped mitigate the decline in demand from OECD (Organization for Economic Co-operation and Development) countries A "sensible" economic framework has been in place since the 1990's. This has included inflation ...
4 comments
Read more