UVXY’s long term chart makes one thing obvious, that there is no ‘bottom’. In its design to express a levered return for volatility spikes coupled with the mean reverting nature of volatility itself, lies a construction that devastates a buy and hold (or buy and wait) approach. This means a never ending procession of lower lows who’s printed value can only be useable by repeated reverse splits.

As of (X-date) there have been (X) ATLs set over (X) trading sessions which means that one is set every (X) days. This ‘reliability’ or ‘destiny’ is how I set about constructing metrics that I use to inform my trading.

Realizing that any baseline I use will be {arbitrary} by definition, using the frequent ATL seems like an workable place to start. ATLs set the trough for my peak to trough measurements (e.g. spike %) and then for time until a new ATL is set following a spike (peak to new ATL). While there are certainly material spikes that can happen after a peak but before a new ATL prints, the criteria for when to measure an ‘aftershock’ becomes even more subjective.

In statistics, the size of your dataset has a direct impact on the reliability of the reading (Law of Large Numbers) If you look at an example with only eight occurrences, the reliability of the outcome even if that was 8-for8, is weak. Consequently, if you are analyzing price action of UVXY since 2011 and now have over 2500 daily occurrences, or 500 weekly occurrences, you can start to build confidence in your probabilities.

As UVXY, along with the entire vol based universe is relatively constrained in what it can do, having an understanding of its probable price action can be a backstop for any trading strategy. This makes ATLs and their frequency a valuable tool to inform my trading