1. HOW I TRADE LEVERAGED ETFs (LETFs)
OC Traders Dec 5, 2009
Wally Eater

2. DISCLAIMERS Not a professional trader
Presentation is for information only
Not selling or soliciting anything
Viewers hold presenter harmless
Not an offering per SEC Acts of

3. WHAT I’LL COVER HOW SELECT SPECIFIC LEVERAGED ETFS
OBJECTIVES / TRADING PROCESS
TRADING RULES
PRIOR EVENING PREPARATION
CURRENT DAY
DAILY
WEEKLY
EVALUATION
Q&A- Hold questions until end

4. HOW SELECT SPECIFIC LEVERAGED ETFs?
How much will be used for high risk trading (x% of assets, increase modestly w/success)
Trade in for-profit or non-profit accounts?
How much risk will I take? (1:1, 2:1, 3:1, 100:1, 200:1)
How much liquidity do I want? (<50k shares/day, >250k, >500k, >1000k)
The Vital Few: ETFs Ranked by Average Daily Value Traded; 2% of ETFs are 92% of activity (URL lists top 72 ETFs (23 LETFs), daily trading >$107MM, 11/12/09)
What has large % change: day to day & swing days?

5. OBJECTIVES / TRADING PROCESS
Stay calm
Think
Take profits (min 1%/trade, target 3-5%/ trade)
Cut losses (2-3 daily candlesticks down Heikin Ashi)
Don’t get greedy
Let profitable trades run
Trade with the trend
Participate in trading groups
Learn alternatives to investing (options, currencies, etc)

6. STRATEGIC TRADING RULES
Keep about 20% of trading funds as opportunity cash reserve
Don’t exceed $x in open orders
Find a way to identify market pivots
Follow technicals until they don’t work
Sell, if huge gap up, in pre/post markets
Constantly look for new / revised technicals and ways to identify market pivots

7. PRIOR EVENING PREPARATION
CNBC
/YM Dow futures
/ES MiniS&P futures
/QM oil price (investments & occasional trade)
Brokers- Economic news for Mon
Currencies (TOS: Trade >> Forex Trader)
Financial Times>> Markets>> Market Data>> Market Macromap
Has the market trend changed?

8. FINANCIAL TIMES Live http://www.ft.com/
Financial Times >> Markets >>Market Data >> Click on Market Macromap
Market Macromap:
Upper left: select Global Market Indicies THEN
Bottom right select Choose Performance or Relative Volume
Upper left select Global Currencies THEN
Bottom right select Choose Currency (1 of 31 currencies)

9. CURRENT DAY (1 OF 3)
Hot green tea (white, gunpowder), switch to diet cherry: Dr Pepper, Coke, Coke Zero, DietRite
Settled funds for day
Options expirations calendar, OIC
SeekingAlpha.com: Breakfast Must Know
WSJ.com news
FT.com news, Intl (markets, currencies)
Exits for symbols held (open orders)
Capture Dow, oil and $DXY (USD) 929am ET
Earliest buy: wait minutes or so after open

10. CURRENT DAY (2 OF 3) Technicals (TOS settings,1M candle unless shown):
VIX, Bollinger
RSI Wilder (2, 95, 5, close)
CCI (14, -200, 200), buy if CCI >300
Stochastics Slow (95, 5, 49, 7, High, Low, Close)
MACD (5, 26, 12)
Rate of Change (14, 14, Open)
On Balance Volume (OBV)
Quick confirming glance at $TICK, $TRIN, $UVOL, $ADVN-$DVOL
If most technicals in alignment & price >3% of high for day, buy
When buy: enter technicals on notes sheet
When sell: enter data in Excel w/grade & comments

11. CURRENT DAY (3 OF 3)
Excel: dates bought / sold, prices bought / sold, technicals at buy, comments at sell; YTD & month to date P&L; # days held; analysis (Expectancy – see Rick Edwards presentation in Oct at xsprofits.com)
1245pm ET Fast Money Half Time
230pm ET Cramer
2-3pm ET Record Fast Money, Mad Money; watch PM
Enter data (open/high/low/close, vol) & review daily changes and gaps on 17 symbols for 1, 2, 3, 4, 6 days

12. EXAMPLE- Tues, 11/17 (enlarge to see).

13. DAILY Treasury auctions Info Update data on indices / LETFs I watch
broker, CNBC bid to cover
Forexfactory (good int’l calendar, thanks to Phil Peralta)
Update data on indices / LETFs I watch
Update P&L, if sale

14. WEEKLY TUE 100-200pm ET Am Petroleum Inst oil data api.org
WED 1030pm ET Oil inventories- Energy Information Admin (EIA)
THUR 830am ET Initial/continuing unemployment claims
CNBC live and broker for data
1030am ET Nat Gas inventories CNBC live and broker for data

15. END OF DAY LETF ANALYSIS 12/4/09

16. EVALUATION OF TRADES Excel of running trades, day, mo, YTD
Review technicals for entry and exit
Why trade did / did not work
Too early / late exit?
Change LETF and / or technicals?

17. A FEW RESOURCES (also search Google & Bing)
List of leveraged ETFs traded on US / Canada Stock Exchanges (hot links to leveraged ETF providers):
Dissecting Leveraged ETF Returns:
Leveraged ETFs: A Value Destruction Trap?
Leveraged ETF Ticker Symbols- All the 2x and 3x Return Info You Need

18. Q&A ADVICE SOUGHT
Do you have a way(s) to identify TREND REVERSALS, such as the downtrend reversal that changed to an uptrend in March, 2009? Pls your suggestions:
LETF trading group: Wed, 12/9, 1/6, 530pm, Panera, Lake Forest; or participate via Skype; your interest and Skype name to: .
QUESTIONS ???
# # #

19. OC TRADERS FORECAST 32% 14% 12/4 1106 106.8 11/13 1093 105.5 10/30
DATE
SPX
INDEX
(Base =
100.0%)
2 Wk
BULL
NEU
BEAR
5 Wk
54 Wk
12/4
1106
106.8
32%
40%
28%
11/13
1093
105.5
14%
48%
38%
10/30
Base
N=25
1036
100.0

20. EXAMPLE- Tues, 11/17 (enlarge to see).

21. END OF DAY LETF ANALYSIS