A lot of newer investors are tempted to buy 3x ETFs like NUGT and JNUG, when things get bullish. Especially when newsletter writers make it sound very bullish and a sure thing. I did in the past, I paid my tuition.
Let's take a look at a very bullish run, last year's GDXJ chart. The chart shows some of the dips along the way.
Can you handle -20%, -30%, -50% dips along the way? Add onto that the uncertainty of where the move will go. And when you open yourself up to a 30% decline, you've thrown risk management out of the window, and are vulnerable to panic selling.
With the benefit of hindsight, we see a 200% move in GDXJ resulted in a 1300% move in JNUG. Few, if any, probably rode it with any success.
My strategy will be to accumulate good miners over the next couple weeks. Some of my purchases last week have done well, and I'm holding. Some, like NSRPF, I had to take profits early due to a sharp move.
Let's take a look at a very bullish run, last year's GDXJ chart. The chart shows some of the dips along the way.
Can you handle -20%, -30%, -50% dips along the way? Add onto that the uncertainty of where the move will go. And when you open yourself up to a 30% decline, you've thrown risk management out of the window, and are vulnerable to panic selling.
With the benefit of hindsight, we see a 200% move in GDXJ resulted in a 1300% move in JNUG. Few, if any, probably rode it with any success.
My strategy will be to accumulate good miners over the next couple weeks. Some of my purchases last week have done well, and I'm holding. Some, like NSRPF, I had to take profits early due to a sharp move.
Comment:
For the current, prospective early 2018 rally, a starter entry could be done near the 7 EMA. Or anytime if you're willing to stomach a drawdown. A move like this is likely to surprise most traders and leave them behind.
