There has been a proliferation of market and sector short ETFs in the past year. Curious to learn of experiences trading these instruments. Has anyone been trading the Horizon BetaPro S&P/TSX 60 Bear Plus Fund (TSX:HXD)?
I have a great interest in the Horizon products. I am still trying to get my mind around them and waiting to receive the actual prospectuses from the product provider. Do all the "bears" operate on an inverted basis? And how does this x2 factor work? Is it included in the trading price or and add on when marked to market.
Actually they are still confusing so until I have a developed a confidence in them, I will be patient.
Any imparted knowledge would be greatly appreciated.
Yes, these are certainly short-term trading instruments. The leveraged factor makes these different birds. The HXU and HXD have been trading since the beginning of 2007. If I compare the returns on these ETFs with XIU since that time, it is clear that trading these as trending stocks would invite disaster. XIU was trending positively for most of the time frame, at least until the August correction - HXD would have chewed out 11-12% from a position, while HXU would have returned only what XIU has delivered over the period (3-5%). Obviously, being ahead of the trade with XIU's pattern could help tip some profitable in-out trading with HXD and HXU, but the frequency of trading might make transaction costs considerable. Horizon promotes these as hedging instruments, but it seems that they demand a lot of attention. Still, I, too, would like to hear from someone with first-hand experience with these leveraged ETFs.
I have been charting these these on daily charts with my usual indicators speeded up to see what would result. Since the data is still building, due to the short time from listing, the results have been choppy. However a conclusion reached I have reached, so far, is that it is difficult to see these instruments as intermediate trend trading vehicles:as you noted they require close attention. However, the the psychology in mind, along with a low commission broker, that weeks may be a long trade they should prove handy as long as the daily liquidity is there.
HXU having returned the same % as hold XIU, a consideration may be that the lower market value of HXU would be a boon in initial cash lay out. However, in turn dividends and option writing profits would also limit overall profits to strictly equtiy captal gains.
In my experience the beta pro series are only good for day trading. I enter on buy stop above U and above D prior inventory. Normally it moves one way or the other strongly. An attached limit can help reduce slippage on the fill. Be warned, they are very volatile and that can hurt in a hurry if you have neither a stop nor discipline. Somehow they do not track underlying commodity nor follow chart technicals.