Day traded using Breakouts in FAS/FAZ - terrible idea

I day traded using FAS/FAZ pair, this time using break outs of bases with a tight stop loss order. This method yields a profit of $700 on 6 round trips with 7 winning trades and 1 losing trade. The only losing trade today was when I tried to use FAZ in a counter-trend rally what looked like a breakout which quickly fizzled out. I would have lost even more had I not had a tight stop loss in place. This method compared vary poorly to my watching the stochastics for entry and watching the stochastics+momentum+volume+MACD for exit. The main reason for the poor performance of the breakout method is that after the breakout follows the consolidation period which often gets you back below the breakout. But this also signals failure of the breakout. So I needed to protect myself against that and that made me take really small profits. Sizes of winning trades were 0.01+0.09+0.11+(0.02*3/5 + 0.01*2/5) + (0.03*1/5+0.01*4/5) and the losing trade as -0.11. NEVER TRADE AGAINST THE MAJOR TREND!!! That is one lesson learnt this week. All through the week the counter-trend rally gave very small gains or outright losses. But, hey $700-Cost$120 = $580 is not bad at all on approx. $30,000 account plus the margin. That's like 2% net in one day. If I got 2% everyday then compound yearly return will be humongous: (1.02)^(250) for 250 trading days, basically doubling every month!! Clearly unsustainable. My first day with approx. 10% gain must have been really a fluke since so many large trades worked out. Today I found myself really being TOO CAUTIOUS and I will sell too soon only to find myself buying FAS at a much higher level since FAS was making the staircase every 1 hour or so. I would have made at least 10% had I just stayed in FAS regardless of drawdowns along the way. I was too fixated at limiting the draw down to no more than 1%. On Monday I will go back to my first method.


Meanwhile the hypothetical portfolio of SSO is doing incredible. There I am not arguing with the tape. My gosh even with lower than average volume we have explosive moves. From the bullish sentiment manufactured by the Obama administration I was expecting a 500 point day today. So I am a little disappointed. Remember jamming the tape and tape painting are old tricks of wall street. That's how they make money - just give a higher valuation to their assets and that means they have more money. Incredibly easy game - its real surprise how they can ever run out of money?