to the window to the wall
youtube.com/watch?v=yVO_knDZZy4&t=42s
How long can you safely hold 3x leveraged etf?
- Thread starter easymon1
- Start date
youtube.com/watch?v=yVO_knDZZy4&t=42s
10 month MA EOM signal for QQQ results:
468% increase
Buy and hold for TQQQ from 2010 inception: 4928% increase.
Let's not forget it took roughly 17 years for QQQ to recover from the 2000 highs.
TQQQ would have been decimated in that period.
For the 5 yr period ending 12/31/21, SPXL gained 592 percent while the S and P gained 133 percent. I suspect that is why.
Is it just that simple? If a cat had bought 10K of SPXL and 10K of the unlevered S and P etf he would have had gains near those figures?
Certainly. And when dividends would be figured in, it would be more than that. Where these funds don't perform well is buying and holding in a ranging market.
SoyUnGanador said: "We all know the TQQQ is designed as a 3x long fund. We all know that it experiences "drag" or "time decay", or whatever you guys want to call it, so over time it does not truly perform as good as 3x the QQQ. I've tested this, it is true. It makes LESS than 3x the return of the QQQ but as more than 3x the drawdown. Not but a ton, but by a significant amount. Makes sense.
But then, by that logic, shouldn't the SQQQs, which are designed to be 3x negatives, if you shorted perform better than 3x the QQQs, not from a 3x total return perspective, but from a return/draw down ratio? Obviously they could adjust the amount of futures to make it 3x, but are not they just SELLING the same futures TQQQ is buying, and if so, should it not get the benefit, rather than the detriment of that time decay?
But by my calculations - since SQQQs inception, if you had invested $100 in QQQ, you would have received an IRR of 16.945% and a max DD of 35.119%
To make that same 16.695% on your money in the SQQQs, you would have had to shorted $33.367 of SQQQ (note, that is slightly MORE than 33.33% if it was a perfect 3x, showing no time decay working in your favor, the opposite it seems to a very little bit), and your max DD would have been 35.663% (again, slightly WORSE) than the DD on the QQQs.
Why does shorting the SQQQs perform slightly worse, rather than somewhat better, than buying the QQQs? Why is there apparently no time decay or whatever?
Thanks! And sorry if this is a very newb question, I'm not sure I know how these funds work."
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EXCATLY;
its not the decay or higher management fees that causes the main problem.
Decay may sound better because that means it's the ETFs fault not the trader/investors LOL.
All the brokers call it profit + loss or gain + loss.
Good trend comment.
Negative drag goes increases with leverage when your position is not trending strongly.
A gain of X% followed by an equivalent loss of X% (or a loss then a gain), always result in a net loss. With more leverage the drag grows as the square of the leverage.
In this example leverage of 1.5-2% is optimal in choppy conditions
A gain of X% followed by an equivalent loss of X% (or a loss then a gain), always result in a net loss. With more leverage the drag grows as the square of the leverage.
In this example leverage of 1.5-2% is optimal in choppy conditions
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