Back in April I described a swing trade system designed specifically for the 3x leveraged financial ETF known as FAS. On paper at least, it’s had a great hit rate and return since just after its inception. I say “just after” because the ETF was created just before the 2008 financial meltdown, and the first few trades were, shall we say, disheartening. (Although it should be pointed out that even during those hard times, there were winning trades as well as the other kind.)
“Yes ok you’ve created a great system in your imagination you numbwit, but how does it fare in the real world?” You ask an excellent question (if a little rudely). So I’ve tracked the system since then, and even traded it twice.
Since I published that post in April, there have been five trade setups. On a trade of $1500 rounded down to an even number of shares, with $4.95 commissions each way, you get the results below:
Which explains the freakily-straight equity chart. All but the first one are just around 3% profit.
If you like your equity curves showing all the hills and valleys in between (and perhaps prefer a dark background, which is much more of a financial-tough-guy look), here ya go:
Pretty good, eh? It’s such a ridiculously simple system. And yes, one day in the future the system will mightily implode, but all systems do. Until then, I’ll keep trading it occasionally.
P.S. This system seems to work with a few other 3x leveraged ETFs as well. I’ve modified the exit a little, but the basic any-moron-can-see-it entry signal remains the same. If you’re the backtesting type, give it a try on these tickers too: