Crash Recovery
Detect deep drawdowns and re-enter positions as markets recover.
What is Crash Recovery?
Crash Recovery is a systematic approach to re-entering positions after a significant market decline. Rather than trying to catch the exact bottom, crash recovery strategies wait for objective signals that the worst of the selling is over and a recovery is underway. This is particularly important for leveraged ETFs like SOXL, where drawdowns of 50-80% are not uncommon during bear markets.
How It Works
A crash recovery signal typically monitors the drawdown from a recent high. When the drawdown exceeds a defined threshold (e.g., 59%), the system begins watching for recovery signals. Recovery is confirmed when the price moves meaningfully off the low and other technical conditions align. The key is balancing sensitivity — too tight and you re-enter into dead-cat bounces; too loose and you miss the recovery.
How StockSkier Uses It
StockSkier's crash recovery system activates when drawdown exceeds 59% from the recent high. It then monitors for recovery signals including price closing above a minimum position within the drawdown range (60% off the low) to filter out fake bounces. Recovery entries use the same weighted scoring system as regular entries to ensure quality. Additionally, after a profitable trail stop exit, StockSkier maintains a residual position and monitors for recovery re-entry opportunities within a 20-day window using a 10-period EMA crossover.
Key Takeaways
- ✓Crash recovery systematizes re-entry after major drawdowns
- ✓Waiting for confirmation avoids dead-cat bounces
- ✓Leveraged ETFs experience amplified drawdowns, making recovery detection critical
- ✓StockSkier uses a 59% drawdown threshold with recovery quality filters
- ✓Residual position + recovery re-entry captures post-crash momentum
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Important Disclosure
Educational content is for informational purposes only and does not constitute financial advice. Past performance does not guarantee future results. Always do your own research and consult a qualified financial advisor before making investment decisions.