How to trade multiple markets safely

The goal of the B12 Trading System is to capture the diversity of global markets to capture new trends no matter where in the world they exist. The other benefit of market diversity is to protect yourself from putting all of your trades in a single market since a majority stocks/ETFs within individual markets tend move in unison.

Even though I trade in 12 markets, I like to look at different market ETFs within a market that may provide a more optimized setup, but the same exposure to a major market. Often times traders will trade multiple stocks/ETF in the same market and when that one market falls, all of their investments fall with it.

The way I trade the ETFs in the B12 Trading System are simple:

  1. Trade leveraged ETFs whenever possible to maximize short-term gains (though they are more risky as well)
  2. Do not trade in more than 5 markets at once – We are in a global economy, and spreading your trades over more than 5 markets starts to dilute the benefit of diversity
  3. Only trade in 1 ETF per market (Because I do track more than 1 per market and make changes as new ETFs provide a different angle to the same market)

When selecting the ETF I want to trade, I will only pick one in the market I’m looking at. If I’m determined to get in a market then I will put in orders for multiple ETFs in the same market but issue (Order Cancel Order) orders so only one order gets filled.

Here is how I break down the 12 markets I track:

  1. US Stock Market
    • SPXL (S&P 500) – http://www.direxioninvestments.com/products/direxion-daily-sp-500-bull-3x-etf
    • SOXL (US Semi Conductors) – http://www.direxioninvestments.com/products/direxion-daily-semiconductor-bull-3x-etf
    • XIV (Inverse VIX) – http://www.velocitysharesetns.com/xiv
  2. Brazil
    • BRZU (Brazil) – http://www.direxioninvestments.com/products/direxion-daily-brazil-bull-3x-etf
  3. China
    • YINN (China) – http://www.direxioninvestments.com/products/direxion-daily-china-bull-3x-etf
  4. Emerging Markets
    • EDC (Emerging Markets) – http://www.direxioninvestments.com/products/direxion-daily-emerging-markets-bull-3x-etf
    • ** Because EDC splits it’s investments between Europe and Asia I don’t hold positions in YINN (China) or EURL (Europe) if I’m in EDC (Emerging Markets)
  5. Energy
    • GASL (Natural Gas Companies) – http://www.direxioninvestments.com/products/direxion-daily-natural-gas-related-bull-3x-etf
    • UGAZ (Natural Gas) – http://www.velocitysharesetns.com/ugaz
    • UWTI (Crude Oil) – http://www.velocitysharesetns.com/uwti
  6. Europe
    • EURL (Europe) – http://www.direxioninvestments.com/products/direxion-daily-ftse-europe-bull-3x-etf
  7. India
    • INDL (India) – http://www.direxioninvestments.com/products/direxion-daily-india-bull-3x-etf
  8. Japan
    • JPNL (Japan) – http://www.direxioninvestments.com/products/direxion-daily-japan-bull-3x-etf
  9. Russia
    • RUSL (Russia) – http://www.direxioninvestments.com/products/direxion-daily-russia-bull-3x-etf
  10. US Treasury Bonds
    • TMF (20+ Year Treasury Bonds) – http://www.direxioninvestments.com/products/direxion-daily-20-year-treasury-bull-3x-etf
  11. Precious Metals
    • UGLD (Gold) – http://www.velocitysharesetns.com/ugld
    • JNUG (Junior Gold Miners) – http://www.direxioninvestments.com/products/direxion-daily-junior-gold-miners-bull-3x-etf
  12. Real Estate
    • DRN (Real Estate) – http://www.direxioninvestments.com/products/direxion-daily-real-estate-bull-3x-etf

 

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