Frequently Asked Questions
Volatility ETFs can be quite volatile, but with volatility can come good profits provided the risk element is controlled. The model is self-learning such that its fail-safes adjust to the price environment of a number of variables such as the VIX, 1x volatility ETFs, and general market.
During periods of amplified volatility, expect more than one try to hit a profitable trade. That said, amplified volatility increases the odds of hitting a 12-18% gain in UVXY in which case the profit taking rule kicks in.
Some examples of our fail-safes in action:
Buy signal on 8/27/15 = Instead of a loss of -10.2%, you would have been stopped out at a loss of -1.5%.
Sell signal on 8/31/15 = You would have closed out the trade on 9/1/15 for a two day gain of just over 20% using VXX, the 1x ETF. The 1x ETF VIXY would also work. Before the fail-safes were active, I remarked in an email update sent to members prior to the model's cash signal that taking at least partial profits when you have such huge profits in such a short time is wise. The model's fail-safes now account for this rare event where profits are huge in a matter of a few days or less.
Sell signal on 9/4/15 = Instead of a loss of -5.3%, you would have been stopped out at a loss of -3.6%.
Similar improvements apply to the other signals prior to the time the fail-safes were put in place in October 2015. Since the signals can be fairly frequent, profits in backtests over just a few weeks can be substantial, even in a largely trendless year such as 2015. The key is in taking advantage of the volatile moves in volatility-based ETFs such as SVXY, VIXY, XIV, VXX, and UVXY. The fail-safes generally keep losses to a minimum while profitable signals are often far greater. That said, always remember that past performance is no guarantee of future results.