3x Double Down System Discussion Thread

Just a place to discuss the 3x system.

From the main thread:

StLBill wrote:Geez, the initial buys seem very low....but then again, I earlier thought $18 seemed like a daydream for USLV....

;-)

I plan to add a ton of funds to this eventually so the user will eventually have a lot of choices and could always be buying the severely depressed price funds.  Takes awhile to do the calculations for each fund initially, but once they are added to the system, maintenance is a lot easier.

Nothing too fancy really, but I like to historically test each fund to determine which percentages to use.  I'll post some examples later.

Basically though it is bet on red with $1000, if you lose, bet on red with $2000, if you lose bet on red with $4000, etc.. Like I said, nothing fancy.

Sure, we are agreed about the double down...or at least multiple down....or maybe even buy again at the same #...
I'd be interested to know if those options work as well....perhaps you can share your technique for the historical testing and I might do some of the leg work to investigate these other options....

And, for that matter...why would your proposed system now work just as well with 100 shares as opposed to 1000s start...other than the % bite from fees....

I'll post some examples, but basically it works like this for UGAZ. Buy when down 30% down from last high (this easier to show how I pick this with example later, maybe I'll just send you spreadsheet). Then buy double when down 10 more percent, buy quadruple when down another 10%... Always keep track of overall average cost and sell when price up 10% above that average.

But what do you actually do to...procedures, historical references, etc. to perform the backtest?

I'll send a spreadsheet by email.  Not exactly self explanatory, but I'll elaborate later on.

If I had a criticism of this system, I would say that it is too safe on the buy side of things.  At times, it waits too long and misses some of the smaller cycles.   It also doesn't account for potentially being lower risk when the underlying commodity is at/near all time lows versus a potentially higher risk when a commodity is at all time highs.  Purely just price action only.

Ok, here is an explanation of the spreadsheet I just sent you (ignore the first tab called historical - I intend to compile all results here).   This is for the UGAZ tab.  Starting on May 19, 2014, for example, we just finished selling off the previous cycle at 23.93.  So now we look at 30% below the daily high of 24.67, which is 17.27.  But since the low of the day was only 23.7, this would never trigger to actually buy.  So we continue up the list looking at 30% below the daily high from that point back to the end of the previous cycle (May 19th).  For example, on June 13th, the high of the day is 28.66.  The max of the daily highs from May 19 through June 13 is 28.66.  So the new buy target is 0.7 * 28.66.  Ok, so then on 7/7, we finally trigger a buy because the low of the day is below our buy target, the low was 19.19 and our target is 20.10.  So the buy would have triggered at 20.10.  If the open on that day were below 20.10, we would have triggered at the open price since it is a limit order. 

Ok, so now we decide when to buy again at double the position or when to sell.  We would sell if the price rose 10%.  1.1x20.10 is 22.11.  We would buy again if the price dropped another 10% from the high (28.66, back on June 13th), or 0.6 x 28.66 = 17.23.  One 7/17, the buy triggered.  Then we go again 0.5 x 28.66 or 1.1 x our average cost, resulting in another buy at 14.36 which is quadruple x our 1st position.  Next buy is 0.4 x 28.66 at 11.48 on 10/20.  This was a pretty long cycle, but good example I guess.  So then the sell finally occurs at 10% above our current average  of $13.15 (1.1x 13.15 = 14.46).   So as a result is $1000 + $2000 + $4000 + $8000 of buys = $15,000, sold at $16,500 for $1,500 profit minus commissions.  But note that for most of this period, you had $8000 or less invested only, only the final 15 days was $15,000 invested.  Actual returns based on average amount invested verus time comes out to $112.93% annualized.

Added small cap bull 3x fund.  Next up small cap bear 3x fund. 


I figure if I add enough variety of funds, eventually there will be something good to buy every day.

Small caps all added.  Next up silver (USLV) - low daily volume, but something I personally hold, so want to see how well I would have done if I used this system instead of my haphazard buying on a whim system.

Not going to bother with DSLV.  Too small volume.  Next up, going to hit some higher volume
internationals, RUSS, RUSL, YINN, YANG.