When an ETF is more than 7% below your buy point, sell it

The best way to preserve capital when you make a mistake on a stock or exchange traded fund (ETF) is to take your losses quickly.

Thus, the Rydex S&P Equal Weight fund (RSP), closed Friday at $26.45, or 7.16% below what I paid for it on Oct. 30, and I will sell it on the open Monday unless it goes up in the first half hour of trading. Also, RSP’s daily chart us flashing some sell signals.

At the same time, the Short QQQ ProShares (PSQ) daily chart is giving some buy signals at $83.98. Depending on how the market opens Monday, I’ll buy it for my paper (pretend) trade ETF hedge portfolio.

And iShares S&P North American Technology fund (IGM) looks like a short on its daily chart. So, depending on market conditions, I plan to sell it short tomorrow morning.

Again, all of these trades are paper (pretend) trades, not real life trades. I’m seeing what happens with an ETF hedge portfolio.

As of Friday’s close, I’ve lost 4.6% of the $19,006.95 I put into the market on October 30, which is when I began this exercise. I opened the pretend account with $100,000. So, I’m down 0.9% in the last two weeks.

Normally, I keep a close eye on the portfolio, but I spent the last eight trading days on a vacation cruise where I couldn’t and didn’t want to play this little game.

As these charts show, I might be in a little better shape if I’d sold everything before going on vacation, but I’m just paper trading. So no big deal.

I don’t own ETFs, but I do own the stocks shown in the charts.

For educational purposes only. Investigate before you speculate. I am not recommending any trades and take no responsibility for how others trade.

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