Thanks for the information, Matt. It's good to know
that although your investigation found the SSO and UPRO ETFs to be
well managed and maintained good leverage performance over time,
they still have potential risks that might affect the performance
or potentially have a "Black Swan" event. I know it may be
hard to quantify, but I assume from your response that SSO and UPRO
may have risks, but may not be in the same risk category / level of
risk as the XIV "crap"?
After doing a little research, it makes sense that if the
S&P500 reaches an intraday loss of 33%, then the entire UPRO
investment/position could be lost in a "Black Swan" event.
While it appears that this condition would not have occurred
in UPRO with the Black Monday S&P500 drop of 20.5%, it
doesn't mean that it couldn't occur in future market conditions.
Using well-managed investment tools with a lot of liquidity,
a system like Spy Pro, having some hard stop-losses does help to
manage the risk. However, if this type of event were to occur
in after-hours, I'm not sure that my current trading
platform/provider applies the regular market session stop-loss in
After-hours trading... With lower liquidity in after-hours, some of
these moves can be amplified that would not be present when
liquidity is higher during the day, and may want to figure that
into setting a stop loss in after hours as well.
Sorry for the rambling, but just trying to do a better job of
identifying any additional potential risk, and evaluating that risk
in investment/trading decisions with the Spy Pro system - risk that
may not be apparent from the System / sub-system statistics that
you have already provided. Appreciate all of the additional
feedback on this topic that you and Steve have provided in the
extra posts in the trading community and newsletter this past
evening. Any additional thoughts/comments/suggestions that
you might have on how we can better identify/evaluate/manage
increased risk to these investments under changing market
conditions (other than what you and Steve have already
posted/discussed this evening) is also appreciated.
Thanks!
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Thanks for the information, Matt.
with all due respect, Steve says stay away from crap ...
Posted by desanyn on 6th of Feb 2018 at 07:04 am
Thanks for the information, Matt. It's good to know that although your investigation found the SSO and UPRO ETFs to be well managed and maintained good leverage performance over time, they still have potential risks that might affect the performance or potentially have a "Black Swan" event. I know it may be hard to quantify, but I assume from your response that SSO and UPRO may have risks, but may not be in the same risk category / level of risk as the XIV "crap"?
After doing a little research, it makes sense that if the S&P500 reaches an intraday loss of 33%, then the entire UPRO investment/position could be lost in a "Black Swan" event. While it appears that this condition would not have occurred in UPRO with the Black Monday S&P500 drop of 20.5%, it doesn't mean that it couldn't occur in future market conditions. Using well-managed investment tools with a lot of liquidity, a system like Spy Pro, having some hard stop-losses does help to manage the risk. However, if this type of event were to occur in after-hours, I'm not sure that my current trading platform/provider applies the regular market session stop-loss in After-hours trading... With lower liquidity in after-hours, some of these moves can be amplified that would not be present when liquidity is higher during the day, and may want to figure that into setting a stop loss in after hours as well.
Sorry for the rambling, but just trying to do a better job of identifying any additional potential risk, and evaluating that risk in investment/trading decisions with the Spy Pro system - risk that may not be apparent from the System / sub-system statistics that you have already provided. Appreciate all of the additional feedback on this topic that you and Steve have provided in the extra posts in the trading community and newsletter this past evening. Any additional thoughts/comments/suggestions that you might have on how we can better identify/evaluate/manage increased risk to these investments under changing market conditions (other than what you and Steve have already posted/discussed this evening) is also appreciated. Thanks!