Do Your Homework on Every Spike Cycle
Volatility and inverse ETFs tend to move in distinct cycles, spiking during periods of market stress, reaching a peak, and eventually declining back toward new lows as volatility subsides. These cycles can vary significantly in duration, magnitude, and the number of intermediate pullbacks along the way.
Trading these products without understanding their historical cycle behavior is dangerous. Each cycle tells a complete story, from the initial low, through the spike and subsequent corrections, to the eventual ATL again. Factors such as how many pullbacks typically occur, how deep they tend to be, and how long the full cycle usually lasts can provide valuable context for position sizing and risk management.
This tool helps traders analyze these historical cycles in detail, offering insight into how these ETFs have typically behaved at different stages of past spikes.
Allows you to choose any completed cycle from the ETF's history, as well as the current live cycle, each identified by its date range and peak price.
Displays key details for the selected cycle, including the starting all-time low and the date it occurred, the peak price and total spike from that low, the current spike level, and the overall duration of the cycle.
Breaks down all drawdowns within the cycle across various thresholds (such as 10% to 50%), along with a detailed log of each peak-to-trough decline and subsequent recovery. This shows how many meaningful pullbacks the cycle experienced.
Provides a visual plot of the full cycle, from the initial all-time low through the peak and all subsequent pullbacks, helping you understand the shape and progression of the move.
Review completed cycles for a selected ETF to understand its typical behavior, including how high spikes tend to reach, how many pullbacks usually occur, and how long cycles generally last.
Look at the final pullback in each completed cycle. Check what type of pullback takes the ETF to a new low. This helps identify how deep the pullback usually is when a spike cycle comes to an end.
Understanding norms helps you set stop levels wide enough to avoid being stopped out by routine bounces, while still protecting against a more significant spike in the cycle.
Analyze cycle characteristics across multiple leveraged and inverse ETFs. These products often exhibit meaningfully different cycle patterns, which can influence which ones are most suitable for a given strategy.
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