Trading Leveraged ETFs For Max Profits


(frenzied music) – [Evan] Hey everyone, it is Evan here, from thetraderisk.com. And in today’s video
we’re gonna be discussing, Leveraged ETFs. Specifically how to trade
them for max profit. Now if you’re finding this
video natively on YouTube, we’re gonna link up the
corresponding article which contains everything
we’re gonna cover in this video it’ll have all the links,
pictures, images, examples and everything that you
can just scroll down, read through and link to, if you rather take a look at this material in that version. Don’t forget, if you like this
video, definitely check out, the rest of our trading
education channel on YouTube or on our website. There’s plenty more articles
and informative posts there for you to watch and read. With that, let’s get
into the substance here on leveraged ETFs and right off the bat, these vehicles, leveraged ETFS bring some pretty strong
opinions from really, the trading and investment community. You have really strong sort
of critics to be careful and not to use them and really
frown upon these vehicles in general and then you have
the other side the other camp on the other extreme which, certainly loves the idea
of the return potential in these things and we’re gonna basically, outline and bring both camps together, kinda show the risks involved and then by taking care of the risks, you can really start to
enjoy some of the benefits. That’s the high level. Let’s get into it and we’ll
start right from the top? What are leveraged ETFs? If you’ve never heard of one, taken directly from
Investopedia their definition, a leveraged ETF is a fund that
uses financial derivatives and debt to amplify the
returns of an underlying index. These funds aim to keep a
constant amount of leverage during the investment
timeframe such as a two to one or three to one ratio. So in plain English, these vehicles, these ETFs seek to double or triple the returns of some underlying index or ETF. For example, if we look
at this slide here. This is a six-month window
of the S&P 500 there, that’s the red line, that’s the spy ETF and that tracks the S&P 500. You can see over this six-month window, the S&P 500’s up 10%. Now that green line above it is SSO which is a levered ETF and it is a 2x leveraged ETF. That means it’s seeking to
return twice the performance of the S&P 500 and you can
see it does achieve that goal as its return is just under
20% over this six month window and then finally, that
third purple line up top, is UPRO and that is a levered ETF that seeks to return three times the S&P 500. Once again, it did achieve
that and it did return over 30% over this six-month window. In a perfect world, this is how ETFs and these levered ETFs would
act with every instrument that they try and track. We’re gonna continue on
here now that we have that base case sort of
beneath us and shown. How are levered ETFs constructed? Remember we wanna really
understand what these products are before we start trading them, before we start getting
into the good stuff on how they can be used and implemented. We really should understand
the risks involved and really how they’re made up. At a very high level,
funds use one or more of the following products to
achieve their desired leverage. Index futures, index options or equity swaps. These are the three
primary ways that ETFs, achieve the leverage of two to one or three to one of that underlying asset. There are risks involved and that is certainly the downside is, all of these products, the index futures and options specifically require constant rebalancing to remain at that target levered objective. You can’t just own some futures contracts and be done with it. Futures contracts have an expiration date, they need to constantly
be rolled and rebalanced. The same thing for options contracts, there’s always an expiration
tied to every options contract so you can’t just have
one set it and forget it, the fund is up and running
and tracking at 2x. Unfortunately you need to keep
every single day essentially, rebalancing and purchasing
different options, selling some off, rolling
them and that is the downside and risks involved, that’s
one of the risks involved with these levered ETFs and
we’re gonna talk about it in a little more detail in just a moment. These are the risks, what are
the risks of levered ETFs? Well here they are? The first is just sheer leverage. If you’re trading the S&P 500 and you want some levered exposure to it, you may go put on that SSO or that UPRO and what you may not
account for right away is, let’s say the S&P 500 is
just in a very quiet uptrend and it’s just grinding out new highs so you go ahead and put on that UPRO to get that 300% exposure. What you really need to be careful of are sudden spikes in volatility. If the markets are closed
and some macro headlines, some news hits and all of a sudden we have sort of a panic or some type
of violent open the next day or let’s say there’s just a more, gradual market regime change where we start to get
into some choppy behavior with more pull backs and two-way trading, that’s gonna naturally increase the VIX, it’s gonna increase the Average True Range and your levered ETF is gonna
start moving a lot further and a lot faster than perhaps
you originally thought or were expecting. And again, we’re using the
S&P 500 and all these examples but as we’re gonna discuss, levered ETFs exists for
individual sectors commodities and lots of other different
products and indices but sheer leverage, that’s definitely one of
the primary risks here. Again, overnight headline or macro risk like we sort of just
discussed in that example and a 3% move, just over a 3% move is going to move a triple
levered ETF, double digits. A 10% move’s quite big so if you’re trying to go
concentrated into a levered ETF just understand that that
underlying instrument only needs to move a little
over 3% for you to be up or down 10%. The potential returns, very attractive but there are clearly some
risks here that you can see, can easily sort of surface or creep up on you. The second is, the second major risk here with trading levered ETFs, ties into that conversation we were having a little bit earlier on the
way that they are constructed. Levered ETFs in general decay over time. Almost as every day
goes by, these vehicles, these ETFs lose a little
bit of their value and the amount that they lose
depends on the product really and how it’s constructed and
what it’s trying to track. And also, really depends
on the underlying movement of that index. But if we get in here to why they decay, it ties back to the constant rebalancing. Levered ETFs decay in value as time passes due to the constant
rebalancing and rolling of underlying futures
and options contract. Just like we discussed, you
can’t just set it and forget it and own the same futures
or options contracts. You need to constantly go
out to the very next month and roll those options out
and when you start to roll and incur those extra fees of
transaction costs and slippage in paying that extra price and premium and then that decay in premium over time if the underlying asset’s not moving, the underlying options or futures contract is slowly decaying and that all ties in to the decay in value over the ETF itself. And really an example is the
best way to illustrate this and what you can see here, and really this isn’t that
extreme of an example. I didn’t have to look too hard, this is the first thing that came to mind and I just printed this chart out. I’m sure there’s plenty of
others I could have chosen so it’s not a cherry-picked example but this is UCO which is a triple levered ETF for WTI crude oil and
that’s the top chart there. And the bottom chart is
the crude oil contract so WTI crude oil contract. We’re looking at an entire
year so we got 12 months of price action and we
got the year of 2016. Really, if we look at
the bottom graph first, you can see crude oil had a 42.8% rally in 2016. UCO again, is the 3x
bullish ETF so really, we’re expecting something to be around 125% return out of UCO over this year because it should be three times the 42.8% that the futures contract returned but what you actually see is something dramatically different. It’s in fact a loss on the year. UCO actually lost -6.86%. So not even a positive
year, didn’t even track WTI on a 1x basis, it actually lost money dramatically. And you can see just the different, the way that chart looks as
opposed to the bottom pane which is the futures contract. This is decay at its finest and this is the risks of holding these instruments
for a long period of time and again I didn’t have to
really cherry pick this example. If you go out and look at really a handful of different levered ETFs over
a six to 12 month time frame, you’re gonna see
something similar to this. If you extend it out to
two, five or 10 years, you’re gonna see something
even more dramatic. And again, they’re not all like this it really depends on what
type of ETF you’re looking at. In general commodities, a little
bit more of a decay factor than indices, S&P 500, the Russell 2000, the Nasdaq
100, those types of things. A little more stable sector
ETFs, a little more stable when you start to go out to
commodities and other products like volatility, those
things get very dangerous. Let’s continue on our conversation here, more on the risk still. We’re gonna talk about the
solution to these risks. Do not hold leveraged ETFs as investment or long-term trades. I mean that’s absolutely
hands-down gonna be, sort of the catch-all here. These levered ETFS do track nicely in the short to intermediate
term, really on the short term so intraday, multi-day, maybe multi-week. But as you start to extend
really beyond a month, if your time horizon
is one month or longer, you should really seek
alternative means of exposure. If you can’t get that desired leverage, you just need to sort of settle on owning the underlying index at a, just a one beta at a natural 1x ETF because the decay factor
here can just dramatically, destroy your performance
regardless if you were right on the direction. Just again, imagine having
a really bullish thesis coming into 2016 on oil and you say to yourself, “Well, I don’t wanna own
just the futures contract, “I wanna own something
that’s gonna give me “even more gains at 3x ETF.” That sounds like the
answer and very clearly, you can see here that’s
certainly not the answer. Back to where we were, I
prefer two weeks or under. I say one month and longer, you should seek alternative means. I personally my style,
if I have to hold some… if I think a trade is gonna
last more than two weeks, I’m generally gonna
look for a different way to express it. I really like to keep my
time horizon very short when trading ETFs. Like we mentioned also,
there are some ETFS that are much more
destructive than others. Like I say, it’s more so the
commodities and other products where you start to see
that decay really kick in. Natural gas, even the gold
and silver ETFs I believe start to lose quite a bit
of tracking error over time and the generally speaking, the index and sort of sector ETF levered ETFs there, do a little bit better of a job but you still need to of
course, do your homework and do your research before trading those. We’ve spent this whole
time talking about risks and sort of how these
ETFs are constructed, let’s start to get into
some of the benefits because there are clearly some benefits to using these products. The first, efficient use of capital. By design, we’re gonna be
trading levered products which basically means, we’re getting, we’re maximizing our capital. We’re getting, two to one
or three to one exposure for just putting up $1 worth of capital. If you have a small trading account or if you just have a strong opinion on the current market type and you wanna have that leverage on, you wanna get your
foot, just more exposure out of that market, levered
ETFs are a great great way to express sort of
short-term opportunities. Levered ETFs also serve as great hedges. You could go to the options market, that’s generally, that is why the options market exists is to really hedge risk, if you don’t have options trading or if you just don’t like
getting into the complexities of options, levered ETFs
are a great way to… are a great alternative and just a great sort of complement to hedge a portfolio. Particularly if you have,
say a retirement account that doesn’t have access
to options trading, levered ETFs putting on something like the 3x bearish ETF to the S&P 500, which is something I like
to use a lot for hedges. That can really start to
cover a lot of exposure again, with an efficient use of capital getting that leverage,
protecting a long portfolio, putting on that hedge and
we’ll talk more about that in just a little bit. Great for additional
broader targeted exposure. Again, if you have a strong opinion, if there’s something that
suddenly changes in a market, a sudden swing or shift in sentiment or news catalyst or any type of shift that you need to really target down or get some more exposure
to, levered ETfs again, are a great option to do that with. Here are some tips for trading them and then we’re gonna discuss
and go into some examples of some trades that I’ve used in the past with these vehicles. The first tip is, have a
short enough trade outlook. We’ve sort of hammered this home, if you have to trade
for more than a month, you should really seek an alternative way to express that opinion
and really just reiterating that thesis, have a short
enough trade outlook. That’s gonna be your first
tip because if you don’t again, it doesn’t matter if
you’re right on the direction, you’re not gonna make money on it. That’s number one, number
two is precise market timing and again, I know we
would love to have this with every single trade that we put on but with levered ETFs
things are magnified. If you have to sit through chop remember, every day that goes by, you’re being affected by some decay, even if it’s just a small amount, you’re technically
losing out day after day, if your timing is not exact or is not, just in the general area of being correct. You don’t wanna sit through
a good amount of chop here because again, that’s just gonna eat away at your trading profits. You really wanna have a strong opinion on, not only direction but market timing. Third is position sizing. Again, this ties back to the risks. If you experience some sudden shift in the market regime,
some overnight catalyst, some news event, anything like that and you’re stuck in these overnight because you clearly can’t
trade these after hours or once the market is closed, position sizing is ultimately
gonna be the only thing that saves you. These are the three tips. This is good of course,
with any type of instrument that you’re trading is
to have a good handle on all three of these but
for levered ETFs again, all of this is magnified and this is gonna be
very important for you to pay attention to. With that, let’s get
into some of my strategy for trading levered ETFs. The trades I make fall
into two categories. The first are quick multi-day setups. These are generally
trades that are gonna last about two to four trading days. These are very short sort of
tactical, opportunistic trades that I’m generally looking for
like momentum or breakouts, things that I think I
can capture just a quick, sudden burst of momentum. Then the longer-term multi-week swings, this is where ideally the
bulk of my profits come from. These are longer-term swings
that are gonna be put on for about a month or so. It’s the multi-day setups
that I trade levered ETFs with and this is where I pick
my spots very carefully and trade very tactically. These setups don’t happen all the time. Maybe a couple a month. It really depends on
the market environment and sort of the market
regime that we’re in. If we’re in a low volatility
trending environment, chances are I’m gonna be just having on more multi-week swings where
I’m just capturing an uptrend but if the market’s uncertain, if there’s volatility out there, I’m certainly gonna have
less longer-term exposure on and I’m gonna be trading a lot more of these levered ETFs in a more sort of opportunistic fashion. The quick multi-day setups,
two to four trading days that’s my bread and butter
and that’s primarily where, I’m using levered ETFs
to express my opinion. I focus on momentum as mentioned so for these two to
four day trading setups, I really like momentum. I don’t wanna trade a pullback, I don’t wanna try and capture a trend, I’m looking for breakouts and reversals. Those are certainly my favorites when trading levered ETFs because you’re generally gonna be right. You’re gonna be right or right out so you’re gonna be either, the trades gonna work in your direction, you’re gonna capture some profit, you can be out of the trade pretty quick or you’re gonna be wrong, the breakout’s gonna fail,
the reversal is gonna fail and you’re gonna know that
in pretty short order. I prefer momentum, not
pullbacks, not trend trades or longer term trades. Here we go there with basically everything we just covered. Let’s get into some examples. The first here is TQQ, so this is the 3x bullish ETF to the Nasdaq 100 and you can see there, where we entered long. On that reversal, on that, basically hammer reversal as we try to break down
through that $90 support, we failed, we reversed,
closed near the highs, that was our signal to get
long and you can see it, after two days we took
40% of that profit off and then on that third day, we just got that real nice
igniting bar through resistance, we scaled out of the rest of the trade, just a three day trade. Ideally we have other long
exposure on at this time to capture a potential
continuation of trend here to the upside but the levered ETF gives us that additional exposure at those key market inflection points. That’s the way I like
to trade these things, is to get that concentrated exposure when I think the timing is right and if I’m wrong on the
timing, I get out quickly. That was our first trade
example, our second one, very kind of similar setup here. This is ERX. This is a 3x bullish ETF on the energy space and once again, it was a reversal trade. You could see the energy
sector here in a downtrend for multiple months and as you can see, it started to break below that $30 level and it had one weekday below that, close below the lows from March 13th and then the very next
day, we came gapping up and shooting back above that
$30 level closing strong. That’s where we got long ERX and again, we got one day of follow-through
and we sold 50% of it the very next day and that’s generally, we’re in a downtrend here,
we’re not gonna be greedy, we know we’re trading
relatively counter-trend here and we wanna harvest those profits off. Then take a look at that
exit just two days later, really not letting it give much room back, we don’t wanna be in this trade, we don’t wanna sit through a pullback, we really just wanna capture the strong sort of
momentum phase and move on when that’s passed. After that, one day as it start to break below the prior days lows, we decided to exit the
trade for a nice quick, few day gain on ERX. Then finally, our third
trade example here is LABU. This is a losing trade and you can see, well first LABU is the 3x bullish ETF on the biotech sector or industry. You can see here as Biotech, as LABU broke above that $52
multi-week resistance, we had that nice strong close. We got long on towards
the end of the day there and you can see the very next
day, it reversed gave back most of those, of the breakout day’s gains but you can see it just
closed right at that $52 level so we said, “Okay let’s
give this one more day. “Let’s see if this
breakout’s really gonna fail. “Let’s see if we get some
continuation to the downside.” And you can see we did
and right as we started to break below the prior days
lows, we got out of the trade and took the loss in LABU. Again, not willing to give much room against ourselves
in these types of names. We really wanna be right in or right out. We wanna be good on that timing. That was a losing trade in LABU. Alright, now let’s continue
on with some of my tips and strategy for trading these. As you could see from
some of those examples, I prefer taking partial profits quickly. I like taking partial
profits into strength. Again, my goal is to sort of be in and out of these vehicles, in and out
of this market very quickly when I’m trading these ETFs. As it starts to move in
my direction, in my favor, I’m already looking to
scale partial profits in that position and looking for just locking in those gains. The gains come fast, they can
also disappear pretty fast so I like to just Lock
them in, get that exposure at those key points and sort of move on and continually take risk off the table. Very quick to exit if things move south. Again, it just goes back to the way I’m designing these trades. I don’t think they’re made
for longer-term holds. I think they’re made to be pretty tactical and you do want to look for
that exit if things move south because you’re getting hit on a double, you’re getting a kind of a double whammy. You’re losing on just
the underlying movement and you’re also losing
on the decay factor. Again, those losses can
accelerate pretty quickly, you wanna get rid of trades that are moving against
you in pretty short order. I also use levered ETFs to
hedge a portfolio of Long’s. Mentioned that earlier. It’s SPXS, that’s generally my go-to for hedging. That is again the 3x bearish ETF so again, if the S&P 500 goes down 1%, this SPXS is gonna be up 3%. And again, if I like other
names that I have on, if I have, Apple, Microsoft,
Google, something on that I’m looking to hold
for the next month or so and I don’t wanna sell it because
it still looks pretty good but I think the market
could start to pullback, I’ll hedge myself, I’ll pick up some SPXS and I’ll be able to sleep easy at night having that hedge on. Finally, I’m gonna talk about my universe of liquid levered ETFs. There’s lots to choose from so when you start to think about, what are the ETFs out
there, what’s accessible, what can I trade, what options do I have? There’s generally many different
products for the same index or sector. And because there are many choices, there’s a few things you wanna verify. First you wanna understand
what is the underlying index it’s tracking. You wanna be able to find out, what are the exact stocks that it owns or what is the underlying
ETF that it’s the inverse of or it’s leveraging up on. You wanna get that down so
you really have a good idea. You wanna look at the underlying ETF to really base your decisions
or your technical analysis, if you will or whatever type of, really, any type of technical study
or analysis that you’re doing should really kind of be
done on that underlying ETF and then you can use the levered ETF just to express your idea. Make sure you know what it’s tracking. Also number two, the average daily volume. This is very important because
you don’t wanna get stuck in a illiquid levered ETF, especially something that’s moving quick but doesn’t trade often or very liquid, you’re gonna just get
crushed on all things, you’re gonna get the decay against you, you’re gonna get the movement against you and then you’re also gonna get a ton of slippage against you. That can be an absolute nightmare. Make sure the volume is trading for your trade size or for your plan. I can tell you that
some of the sector ETFs, some of the indices in
EFTs as levered ETFs, theoretically, volume not incredibly important there because you would always expect
there to be some arbitrage that is existing between
what the levered ETF should be returning and
what the actual index is returning. So you’d expect there to be some arbitrage sort of algorithms kind
of keeping things in line so they don’t deviate too much but again, you still just wanna have
your due diligence in there, you wanna trade something that is doing a couple hundred thousand shares or something close to that. Ideally, that way you’re
not stuck in and again, getting hit on the slippage
on top of everything else. Occasionally, you will
need to find new ETFs if liquidity dries up or
if names become delisted. Recently the very popular GWTI and UWTI, I believe those got delisted. They had some new ETFs come in or I think they either rebranded
them or repackaged them, either way you will have to
look for alternatives out there and there’s new products
that come out every month. There’s new ETFs getting launched, some are gonna be more efficient, may have a lower expense ratio, may trade with more volume. So you always just wanna
kind of double check and see what else is coming out there to see if you should be refreshing or perhaps expanding your list of what’s out there for levered ETFs. Here are the names that I
look at and use in trade. This list will be on that
article link so again, if go on to the show notes, the description of this YouTube channel, you can get the link
to the original article and it’ll have this list up there, that way you can copy it down if you like but it has the, on the
left is the non-levered, is the underlying ETF that each of the bull and the bear tracks. That’s the first page,
that’s the second page. Basically covers a handful of commodities, all the major averages, some of the different
sectors in the S&P 500 and then you have the
commodities, alternative markets in there as well. In summary, leveraged ETFs can be wonderfully profitable trading vehicles when you trade them responsibly. I think that’s the key to
achieve maximum profits, to achieve gains, you really
just need to stay in the game and accept the risks and
handle the risks appropriately so you can achieve the types of returns that these things can give out. By knowing the risks
involved ahead of time which is hopefully what we
covered in this presentation and accounting for them up front, you can enjoy the potential fast returns and efficient use of
capital that leveraged ETFs provide to you. That I think is the secret to getting those returns, is just handling the risks upfront and then letting the
profits handle themselves. If you know the position size
and you know what vehicles you should be trading,
you know the volume, you got all that down and covered, then you can trade them,
you can be allocated to them and you have your stop losses in place and the rest is sort of history. That is really the summary and secret to trading these. And that’s the end of this presentation. So if you enjoyed this video, go ahead and give it a like on YouTube, check out the other videos that we have in our playlist
of trading education on our YouTube channel. And again, check thetraderisk.com
for more articles and connect with me on,
any of our social channels, happy to hear any comments,
suggestions or thoughts for upcoming videos. Thank you guys for watching, have a great day and happy trading. (frenzied music)

27 thoughts on “Trading Leveraged ETFs For Max Profits

  1. Brilliant video. There is a lot of rubbish out there but you know when the Trade Risk decides to do a video it is going to be unbiased and informative. Thanks Evan.

  2. Thanks for this. Excellent video. Nailed the topic in a very concise fashion. BTW, NUGT/DUST are excellent day trading vehicles. Huge volume, nice moves and tight spreads. I'm sure the same is true for other leveraged ETFs, but I haven't traded them much.

  3. What is wrong with buying 100 shares of TQQQ at 70 and selling it at 100 six months later? Where does the DECAY bs come in?

  4. ONLY ONE RULE APPLIES HERE: BUY LOW AND SELL HIGH..ALL ELSE IS B.S.

  5. With this video, you just got yourself a new subscriber!

    I'm learning about the risk/return/reward of leveraged ETF's, and your video was a great explanations of these types of leveraged ETF products. I noticed that many in the FIRE movement are using them to maximize the utility of their capital by actively monitoring them on a daily or weekly basis. Many use double leveraged ETF's for their predictability and risk threshold. The leveraged ETF allows them to accumulate big returns with their invested capital in a shorter amount of time for them to "retire early" as it were.

    As a value investor, I'm a big fan of holding common stock for the long term. However, efficient market theory financial products like ETF's and Index Funds that have built-in diversification seem to be taking much ground in the investing community. The only risk there is the engineering of some newer products may hinder the performance of, and create much noise that may drown out good ETF's currently being offered. I look forward to watching your other videos and learning more.

    I believe vigilance is key to any type of investment decision you're going to make.

    I enjoyed your hammering of RISK into the minds your viewers. Keep up the good work!

  6. Nice video..but i observed that most of these leveraged etf have a high expense ratio. My question to you would be for a given trade how much real returns would you obtain when you subtract expense ratio, commissions/fees and taxes when you trade them frequently? And whether they are worth the risk? Could you provide an insight on this since you trade them frequently? Would much appreciate your response. Thank you.

  7. Waw!! This video are perfect!!! thanks for sharing all these informations! I have a little question by the way… I don't really understand the difference between a 3XBull and a 3XBear They don't react the same?! Thanks again!

  8. I am new to leveraged ETFs. Can you lose more than your initial investment ??

  9. what is expense ratio in an etf, does a trader have to pay that separately or is it priced into the price of the etf

  10. Quick question, why would you not want to hold long during a bull market? If you held tqqq from 2010 until now, you would have returned over 10x gains.

  11. You are completely WRONG on Index Fund leveraged ETFs. SPXL up over 1000% (yes thousand) over last 8 years CONSISTENTLY vs VOO (Vanguards S&P 500) straight ETF is up 145%. So 1000% (with β€œdecay”) vs 145% (with no decay) – give Me decay ALL YEAR after Year Long!

  12. When day trading or swing trading, what is the best investment vehicle you use for tax efficiency purposes? I can imagine someone swing trading 10-20 times a month can take quite a hit for taxes. What’s the best account to balance out the capital gains taxes? Thank you, big fan! πŸ‘πŸΌ

  13. What kind of daily decay are you seeing for Urty, Tqqq, and Upro holding several months or longer term?? I think you needlessly scared the shit out of a lot of leveraged etf investors of these indices. I'm looking at 2018 performances.

  14. Hi, what is the mostly traded 3x leveraged etf for bull & bear for day trader? Is the bear 3x gives 3x the movement of SPY? How does it compare to TVIX?

  15. Trading the triple longs is the easiest way to become wealthy…start trading these yesterday!!!

  16. Wonderful, very informative, to the point video. I jumped into the world of leveraged ETFs cold-turkey. Lost a lot of money by holding-on too long, but learned a lot in the process. Fighting my way back nicely. I guess you only understand what is being said by experiencing it. Final points; you must understand the underlying product extremely well, then overlay the market sentiment and momentum, and remember "Yet their strength and their speed are still based in a world that is built on rules. Because of that, they will never be as strong or as fast as you can be.” ~Morpheus, Matrix
    They have algorithms and speed, you have institution; use it accordingly.

  17. So right now I have 4 shares of sqqq which i bought in the span of two weeks. Im buying through robin hood so no extra fees. What are my decay factors if i decide to hold for another month.

  18. I just spent literally 2 hours figuring out how the TQQQ works (Mechanically) and then I stumbled onto this video and your video made it crystal clear and easy to understand! Great πŸ‘πŸ» video, Thank you πŸ™

  19. Buy and Hold on leveraged ETFs works if the ETF tracks an index that has a daily probability above 0.5 to go up, decay or not. Only a few do. Oil, gold, etc. do not (basically, the nature of leverage is to spread out and change the shape of the return distribution…where the majority of that probability mass lies is essential for success). The other costs associated with this besides that of leverage are the higher fees and the lower liquidity of the etfs (TMF vs TLT comes to mind).

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