2-21-20

 

UGAZ-20-02-01

 

Along with the trade discussed at UNG-20-02-01, was a similar (but much larger) position in the leveraged UGAZ.

 

As shown on the chart, the gain was a solid 13.10%. 

 

This is the real gain:  My firm’s broker no longer charges commissions (or if they do, it’s around $0.01 – $0.05):  Five-cents at worst.

 

How to determine the probability on this trade (or any others) is the difficult part.

 

The description in the UNG-20-02-01, gives a few clues.  In addition, there’s the empirical data here, showing significant reversals tend to occur just before, during, or just after a holiday.

 

That was the case for UNG.  It reached a low during the week just prior to the next (Monday) holiday.  The actual test of the reversal took place on Thursday and Friday of the same (reversal) week.

 

The following Tuesday (2/18/20), price action had a gap-up open and trades were exited.  Those trades were exposed to market risk for mere hours instead of days, weeks or years of the buy-and-hold.

 

Sometimes, a trade will need to be maintained for a while.  However, “maintaining” is not “holding”.  In case of a longer term trade, price action is monitored every step of the way for anything that hints of a trend break or reversal.