Swing Trading Leveraged ETF’s: Bad Entry but Profitable Trade
Within 2 months from my original entry on LABU I was down as much as 37%, but I managed to lock in a 16% gain. My entry in LABU was made breaking two of my rules, do not enter anything under the 200SMA, and make sure its oversold or breaking out. I entered because I reasoned with myself that it has had a 50% pullback and looked like it was bouncing off the 20SMA even though it was not oversold. I was not attempting a large trade but only with about $2,500 was around the max I was wanting to trade here. When I swing trade leveraged ETF’s I have rules I try to always follow. I always try to keep life simple and keep my trading rules simple as well. Always have dry powder and a cash flow coming in incase you must average down, never go all in on a trade. Sometimes it leaves you with making smaller trades, but it will allow you to manage a losing trade and make a profit.
My first entry was on July 2nd, 2021, at $77.67 with a small position of 6 shares. I was thinking it would bounce off the 20SMA and continue to go up. I was wrong and if I stuck with my rules, I would have never even made the first bad purchase. As it continued to go lower, I made my 2nd purchase of 7 shares at $65.32 which gave me 13 shares at an average of $71.18 from the original $77.67. As it continued its decline I continued to add. As a lot of people may have gotten frustrated and exited positions at a loss, I kept my head cool and managed my trade. I added again and bought 7 shares at $62.20, 5 shares at $58.54 and as it entered back into an oversold state, I used the remainder of my planned trade cash flow and bought 15 shares at $50.24 bring my average from my original entry of $77.67 all the way down to $60.18 with 40 shares. Still being down around 20 percent from my average can be frustrating, but I waited patiently to work the trade and lock in profit, and I was not about to close it with a loss.
LABU started reversing out of the oversold condition on my last entry and made its run back up. I had a chance to close out even and slightly up but held on, because I did not go through this trade to break even or manage a small percentage gain. On September 2nd, 2021, it has been two months since I started the trade, and the leveraged ETF has been in the overbought area for about 8 days. At that point I decided to close out my swing trade with a 16% gain. It may only be a $389 dollar profit but moving that into a mutual fund to keep compounding and keep making winning trades is a wonderful way to grow an account.
Conclusions Swing trading leveraged ETF’s is a hustle, and as much as you can see great profits you can see even bigger losses. You must keep you trading simple, stick to rule's that help you win. Keep a small stock watch list and do not over trade. There are many different trading strategies, study them out yourself and use what works for you. If you are a beginner trader, remember if you want to double your money safely overnight fold it and put it in your pocket. Trading and investing takes patience and discipline. I have been trading for twenty years and have made a ton of learning lessons which cost me a lot of money and I hope to teach others what I have learned from the school of hard knock. Always keep it simple, and always have a foundation of long-term investments. I try not to keep my trading positions an exceptionally low percentage of my portfolio. You do not want to work hard for your money and lose it on bad trades.
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