The biggest challenge of trading leveraged ETFs is progressively acclimatizing to large daily swings. This is, for me, the highest mountain you have to climb in order to enjoy the magnificent views and emotions these unique instruments provide.
I don't talk about markets with many people. In fact, I have fewer than a handful of people with whom I exchange ideas. Therefore, observing and digesting daily changes that can easily trigger some serious heartburn for the common retail (institutional?) investor, is something I am used to doing in isolation.
Having a nice end of the day with your Family, cooking a nice healthy meal, or doing a 30 minute home core workout when one of your positions is sinking 18% on the day is something I have learned to do on my own.
I try to see big movements as impartially as possible, be it up or down. Only when I succeed at it am I able to connect what just happened to the remaining pieces of the puzzle, hoping that some simple reasoning comes out of that exercise.
Recently, I found myself paying more attention to the expanding range of SOXL's daily swings. The candles don't lie. Price action on its own is so simple and yet so telling. Much bigger candles, interchanging red and green colours, much more often…
My curiosity took the baton.
One simple question followed.
How many sessions since the June 5 ADP jobs debacle were stamped by double digit moves?
The result surprised me... in the span of roughly five weeks, nearly two out of three daily sessions had registered double digit swings.
That meant I still needed to have enough perspective to think about a possible entry or exit while navigating extremely high and consecutive volatility waves.
Fear and euphoria can suck you in very easily and drag you to a less favourable trading-decision mindset.
At the end of the day, remaining objective and getting a great night's sleep are the two non-negotiable items on my trading desk.
