Big margin potential in 3x ETFs during the next recession

Quote from Maverick74:

No, it won't. It's not how those ETF's work. They are path dependent!
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How do you explain this then?

Look at SPXU:

April 27, 2012 @9.02

rocketed by May, 18 2012 @56.79

How do you explain this jump? I suspect it's being moved by panic. All it takes is a few big institutions to take big positions, and the price sky rockets. How else do you explain this occurrence?
 
Quote from badnewsbear:

How do you explain this then?

Look at SPXU:

April 27, 2012 @9.02

rocketed by May, 18 2012 @56.79

How do you explain this jump? I suspect it's being moved by panic. All it takes is a few big institutions to take big positions, and the price sky rockets. How else do you explain this occurrence?
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You're reading their swings.

The 3x instrument revert to zero due to negative daily compounding called growth decay that is a mathematical certainty.

Your spxu is not the right instrument if you do want a little bit extra leverage. For that kind of play I believe the reason Spxu was at 9 is because it was a fairly new instrument and proshares puts a low value on the longs to start and a high value on the inverse.

You can't probably ever expect any Monte Carlo to do that again it was just started out low in expectation of the rise that happened and that's just the way the proshares are. Sure they start out low on longs but they have much higher inverse IPO prices because those inverses are expected to go to zero so for SQQQ it'd be smart to trade that $10 figure but kind of newbish to expect 20 times that later. I don't see any bear markets for at least two years. Bear market being a 20% correction mainly because large caps are too fairly valued and nowhere near high PE's.
 
Quote from FreeMktFisherMN:

I haven't officially backtested it or anything but I would find it hard to believe that given how bubblicious all this ES is as the algos go along with the narrative of 'recovery', that pyramiding into say at least a 1x inverse SPY ETF wouldn't be in the money 'decently' relatively quick. Not saying this is a martingale, but the principles apply, with the condition that one START the process when something is already overbought. I would be cautious given the light volume and algo and QE conditions of hopium of shorting, but doing so in scaling into longs of say something like coffee or corn soon is a legit idea IMO. Always contingent on it being risk capital. Commodities have intrinsic value and supply demand. Scaling into longs in something already way beaten down is a real idea IMO.
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Algos are just trend following. A fund might have that thesis but, no, there is no algorithm for recovery and that's not what's driving them. Fundamental and macro strategies have this view but they don't use Algos and the kind of funds using narrative of recovery are mainly buy and hold portfolio managers, not Algos.
Algos are trading trends going as far back as 3 years and buying dips. That's just where they buy because they're likely already long looking to add customer money at better prices so learn to distinguish which strategies are actually algorithmic and disassociate any notions hft or the Algos are reading anything but bid bid size ask ask size and absolutely nothing else.

Opinions that are subjective are never algorithmic. They're fundamental built around somebody's opinion whereas Algos don't read the newspaper or headlines but can but they aren't using that infrequent input like macro data to trade. It's all about NBBO and how do I make my size fill faster and for that algo High Frequency trading only concerns price not any newsfeeds or likewise typically aren't part of Wall Street's strategies when talking about 'algos'.

If you stay on here long enough, you'll figure out who has black boxes like that and who doesn't.
 
Quote from badnewsbear:

Same with FAZ. It was at ~$30 on Feb 18, 2011 and spiked up to ~$157 by Feb 25, 2011.
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Quote from badnewsbear:

Look at SPXU:

April 27, 2012 @9.02

rocketed by May, 18 2012 @56.79
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You need to stop quoting pre- and post- reverse-split prices.
 
I look at the market game theoretically a lot, as well as incorporating fundamentals/common sense. Something like, if one has the risk capital to do so and maybe a put as a hedge somewhere, scaling into coffee incrementally even if it goes against is a real idea here. It's ALREADY way down and martingaling it long FROM HERE seems like an idea. Is it really going to waterfall from here (1.19/lb) to say .50/lb? All one needs is a decent retrace on that anyway, not to even have to call THE bottom.

I understand the importance of knowing algo patterns/trends for sure. I prefer to trade ETFs on commodities so I can take some heat and let a thesis play out as opposed to a random stop out on some flush out.

The leveraged ETFs are worrisome in that they decay, although I think SPXU actually held up better than one would think it should have as it was a ways less than 3x down %-wise what the SPY did, if I checked right. No clue why that is.

Buying something like UVXY to me is equivalent to buying a put option that is like a lottery ticket. Fully expect to have it sour, but it can jump big time. And those who've held off trying to countertrend this ES rally have a lot less downside now given the VIX is so compressed.
 
Quote from failed_trad3r:

the big potential is in puts and short futures. 50x, 100x 200x leverage!

become the next billioiare!
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Yeah, I'll stick to long puts.

After reading all of the comments in this thread and double checking my original hypothesis, I understand that these leveraged ETFs aren't capable of the returns that I hoped for. The only decent investment I see is from 3x bullish ETFs if you can time the bottom of the bear market and hold them until the end of the following bull market.
 
Despite gold's orchestrated takedown, DUST is down, for instance. I'd rather just outright go into the futures rather than trade leveraged ETFs, aside from maybe UCO and SCO (crude oil 2x bear/bull) which I've done well with as they are more conducive to ranges and defined risk/reward setups.
 
Risk/reward wise I'd think if one more run up in ES buying UVXY if it would be maybe near 13ish and playing for 17 before, say, 10.50 as a pure risk capital trade lotto ticket is an idea. Super beaten down already. Otherwise no thanks as far as myself trading that thing, although I think these XIV/short vol beneficiaries will get hammered eventually because the spikes can be something when they get going in the VIX. People always think this time is different.
 
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