How I look at inverses

Hey Market Pilots,

I think most of us are geared and trained to trade to the long side. Meaning our eyes are most attuned to seeing bottoming and reversal patterns. We may be great at getting out at the top of a move, but perhaps we lack the ability to short when the time comes. I am not a big fan of going short anyway, so my way around this is to go long… long on an inverse ETF.

An inverse EFT is a ticker that mimics another ETF but the opposite. Since I trade stock and I am trying to take advantage of a short term move, I prefer leveraged inverse ETF’s. For the SPY and the QQQ, this would be SPXS and SQQQ respectively. I trade these because a short trade, oftentimes, is just a long trade upside down. Case in point is the SQQQ trade below.

This setup is everything I trade and teach with the Moxie Indicator. Picture perfect and by the “Moxie” book. The hourly chart put in a double bottom with positive Moxie divergence and a Trampoline Move. Then the 15 min bounced right off the 15 min 50 SMA and there it went.

This might have been difficult to see on the QQQ because we are always looking for price to go higher and maybe not as well versed to see the downside. But then you look at the inverse ETF of that same QQQ, and it stands out like a sore thumb. Because of our familiarity with trading the long side, we are now back in our comfort zone for how to tackle this particular trade, even though it’s really a short trade.

Over and Out,

Your Profit Pilot


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