Loading ...What’s decay ?
I’m getting questions regarding decay in the 3X PM trades.
Here is a chart showing this phenomenon…Red and White Candles = GDXJ
Black and White = JDST
I can’t completely explain why this happens but it has something to do with the fact that the 3X leveraged etfs reset every day . Take JDST for example….it moves inverse 3X the price action of GDXJ. If GDXJ drops 5% one day
JDST goes up 15% that day. The rinse and repeat each day. Anyhow its complex BUT look at the chart last time GDXJ was at 44 July 1 JDST was $8. Today it is at 44 and JDST is at $7. This is 12% less even though GDXJ is the same price. This is an important concept to be aware of in trading these things .
FGC
Where I can, I try to short the opposite vehicle – for example, I missed Mark’s DGAZ trade, but after the initial break in UGAZ, I “shorted” the bounce twice into the low 40’s and now have a FULL position that is very profitable. It costs a little more to hold it short in the account, but then I have the “decay” on my side and I can actually ignore that factor in my trading decisions – has made me a little more patient and strategic in taking my positions, FWIW
Good if you can short a 3Xer
Wanna make 100% sure $s ?
guaranteed can’t loose !
Short BOTH JNUG and JDST and just sit on them…they BOTH decay
So basically your trade is a wash every day but over time ( not much time as you can see here) the decay always makes you money
I don’t have a margin account so I can’t short but it has been on my to do list for a while
some say you can’t get shares of both to short all the time BUT if you can
Just short both with equal $s amounts and You have a licence to print money…your only cost is the interest to “borrow” the shares ( margin interest|) How much is that in this day and age ?