Trading ETFs

I had some success trading ETFs recently. Specifically the double inverse Proshares SRS but SKF and SMN may work just as well in the right situation. The first time was last Monday when the market started sliding right from the open and I bought SRS right away and sold at the close for a 27 point gain. The market had gone up five consecutive days prior on light holiday volume so I was highly expecting a market sell off.

Today the market chopped around all day until 2 pm when it went red and a half hour later the the sell off accelerated. The EOD (End of Day) Massacre was on, again.

This is how I traded SRS:

at 2:38 bought 40 @ 86.43 and when I saw the trend strengthening I added to the trade
20 @ 87.71
20 @ 88.28
20 @ 89.11
20 @ 89.91
20 @ 90.60
20 @ 91.68
20 @ 91.76
20 @ 92.21

for a total of 200 shares which I sold a few minutes later @ 91.74 as I wanted lock in the nice profits. Less than 10 minutes later SRS is making new highs and I bought 50 @ 93.36 as I was thinking there was 35 more minutes before the market closes, plenty of time for more action.
Again I added to the trade
20 @ 94.64
30 @ 95.04
20 @ 95.79
20 @ 96.78
20 @ 98.31

for a total of 160 shares which I sold @ 98.27

Profit on the two trades was 927 before commissions, not bad for a couple of hours work. Sure beats cleaning dirty carpets. What I did wrong was I added too many times in small increments resulting in commission cost of 112, YIKES! In the heat of battle I kinda lost track of how many times I added and as the trend got stronger I got braver as there was no big pull backs like there was earlier in the day. I never planned on trading 200 shares, mistake number one...no plan. Best to add one or maybe two large and be done with it.


Here's some points I've learned about day trading ETFs. Markets generally fall faster than they do going up that's why the double inverse ETFs will produce a bigger bang for you buck. In other words their ADR (average daily range) is very high. How does one decided which one to play? I answered that question today by looking at which of the three, SMN, SRS, SKF, was performing the best. Through out most of the day SRS was ahead of SKF by about 3% and SMN was behind SKF by a few %. So it was pretty easy to pick SRS today. SRS also has a larger ADR than SKF, followed by SMN. At the end of the day today, SRS had gained 24.6%. SKF 15.4 and SMN 7%. Until their ADR changes SRS will be the weapon of choice.