Why buy Gold at almost record all time highs? Why trade Silver futures with a high leverage that can bit me in the ass in a single day?
I prefer to buy the ETF and trade it like a share✔️, thus no expiry on a CFD✔️, no huge leverage✔️, no expiry means i do the broker no favors✔️
For this trade alone I have an account on a broker just for this one, yes only this trade. I deposited an amount I can lose without crying and I do 2 things:
I buy it and I compound the profits.
If Silver goes to 50 again then this should go to 700s again like it did 10 years ago.
If that happens, the broker will be in pain. My favorite people to hurt (financially) is the brokers.. as you all they can afford it.
Risk to reward with a leverage of 5 and compounding is 300 to 1. I take this trade 20 times if I have to (this is actually attempt number 3😉)
It's calles Beta-slippage. It's math really (the higher the volatility the higher the decay, the faster it rises up without many 'downs' the lower the decay). In a trending market, beta-slippage can even become positive! Let's go back to the math: the simplest trending market is two consecutive days in the same direction. Imagine an asset going up 10% two days in a row. On the second day, the asset has gone up 21%: (1 + 0.1) * (1 + 0.1) = 1.21 The perfect 2x leveraged ETFs is up 44%, more than twice 21%: (1 + 0.2) * (1 + 0.2) = 1.44 A leveraged ETF in a steady bullish trend may outperform its leveraging factor. Hope it helps mate
reidmanchester
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@FX_Professor_88, great explanation, better than the articles I read! much obliged.
I love AGQ and we messaged about it a month ago. Guessing that you jump in and out a lot? Is that to reduce degradation? A long term hold of a leveraged equity results in 'degradation', no? I've never been able to figure out how much degradation.
FX_Professor
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@reidmanchester also: you trade the future on your broker and every monthnit changes... That means that the broker can change to the next future at the end of the month. Say you are long on Oil, oil is at 21$, next future opens at 25$, your broker doesn't pay you ANY profit from 21$ to 25 $!!! New future sir, sorry 🤣 Whereas witj a stock (like agq) you don't have that problem (no expiry)
OperJeff
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I remember in 2011 they dropped margin limits on silver from 5x to 2x and that killed the run upwards almost immediately. if there's still margin caps of 2x than I dont think youll see 700 again. maybe 100+ though.
FX_Professor
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@OperJeff, it all depends on silver and how fast it can rise. You have a valid point, personally I would be happy to see 200.it's more than enough
Earthmatrix
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And so it begins....
Ken21
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What's your process for compounding the profits?
Also, why $50? It's hit or surpassed $50 for the last 7 months in a row.
FX_Professor
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@Ken21, last.time that Silver hit 50$, agq hit 700..im talking Silver 50$ 😉
On the second day, the asset has gone up 21%:
(1 + 0.1) * (1 + 0.1) = 1.21
The perfect 2x leveraged ETFs is up 44%, more than twice 21%:
(1 + 0.2) * (1 + 0.2) = 1.44
A leveraged ETF in a steady bullish trend may outperform its leveraging factor.
Hope it helps mate