Key insights
- The author is considering a leveraged ETF trading strategy involving SPXL and SPXS, using VIX and crude oil futures as indicators for market timing. The strategy aims to capitalize on market uptrends while mitigating pullback risk. However, the inherent risks of leveraged ETFs and the challenges of accurate market timing suggest caution. The strategy's reliance on backtesting results from ChatGPT may not accurately reflect real-world market conditions.
I am working on a SPXL using ole reliable chat gpt that back tested a conservative SPXL long strategy way an imperfect timed flip to SPXS. I’m aware of the problems with leveraged etfs and the daily reset but was wondering if I’m trying to get too technical with the strategy or if I should mostly shut out the short flip. Current strategy has a 2-3 times per year flip based on a combination of the VIX and crude futures. Chat gpt estimated a 40-80% return year over year if performed perfectly, a 20-60% return given the human urge to predict the flip. Was just wondering if this strategy is stupid or not. I still intend to sell out when the VIX hits over 28-30 and crude rises above 90-100. This would put me out of the market for a day or two before entering SPXL again. The idea is to miss most of the pull back and gain the returns on the way up. Let me know if I’m dumb please.