Quote Originally Posted by nickola.pazderic View Post
I do have a rather significant question about the robots, and it regards position sizing. I sense that more experienced hands adjust their positions, choosing leveraged or unleveraged plays depending on their experience.
Nickola,
FWIW, after experimenting various roads, the way I currently do it is always keeping 1/3 position of TNA/TZA with the robot exposure as if I were fully positioned but unleveraged with IWM.

I enter the remaining 2/3 with the initial robot entry and will always exit with the robot if not stopped out. As a general rule, the initial stop loss for that leveraged portion is 0.2% below the first IWM cluster support from the entry date. This initial stop may never be lowered. That stop is the maximum loss I am ready to take on my 2/3 leveraged position, barring big gaps. I can of course discretionarily adjust the stop porosity depending on circumstances, but it is just fine-tuning. If the initial stop is hit, I exit 2/3 of my TNA/TZA but always keep the 1/3 that follows exactly the robot rules.

If there is no robot signal change, I will try to reenter the 2/3 position at each day’s robot limit price with the same initial stop rule.

When initial stops on the 2/3 TNA/TZA positions are not hit, I wait for one higher low and two higher highs (if long). I draw a Fibonacci retracement grid from the first low preceding the higher low to the higher high and keep updating the Fibonacci grid if new highs are made. I have a trailing stop for 1/3 of TNA at a 39% retracement (failure of the 38.2% Fibo level) and another trailing stop for 1/3 of TNA at a 51% retracement (failure of the 50% Fibi level). The Fibonacci computations are made on TNA/TZA, not on IWM.

Any portion stopped out can be reentered on following days at the robot’s new limit if there is no signal change. The same initial and trailing stop rules apply from the day of reentry.

The general idea is to capture a maximum of profit on the leveraged position and avoiding any temporary leveraged profits to turn into losses. Remember that gains and losses are compounding 3 times faster on the leveraged ETFs. Your initial risk on leverage is theoretically (barring gaps) the size of one support cluster which is close to 1 ATR.

Billy