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Frequently Asked Questions

Dr K Market Direction Model
MDM had a buy signal. I bought a 3x ETF. The ETF moved higher but now has moved back to my original buy price. At what point should I have exited if at all?

Q: MDM had a buy signal. I bought a 3x ETF. The ETF moved higher but now has moved back to my original buy price. At what point should I have exited if at all? I am still holding my ETF since the model is still on buy.

 

A: Some pyramid, some have various exit strategies, and some go strictly by the MDM's signals so would still be in their initial position when the model issued a sell signal. It is up to each member to determine their own risk tolerance levels for position sizing, pyramiding (if at all), and exit points (though many members just follow the signals thus do not exit until the model switches signals). Of course, if one is using a 3x ETF such as TZA, one's position size should be commensurate with the volatility in TZA and their risk tolerance levels.


Published: Nov 26 2012