Long TQQQ vs Short SQQQ

[GloriaBrown]

They’re both inefficient by design, so shorting SQQQ should be better since you’re profiting from both bullish market and built-in inefficiency of the instrument.

Yes I agree. Both started in the same day back in year 2010. Tqqq has raised 175 times while sqqq has dropped from around 10000 to 20. I did some simple math:
If take profit when short sqqq with 50%,30%,20% profit is not closed to 175 times.
But if decrease % to 3%, then profit is around 400 times.

1000 dollars would become 4 millons

So swing days trade with few percentages gain in average would be better with short sqqq.

And tqqq was good only because NQ goes up most of the time from 2010 to now. If market slideway for months then short sqqq would beat long tqqq a lot.

 

[shatteredx]

Thx for testing result. What is the average holding time period?

2 to 3 days roughly

 

[GloriaBrown]

2 to 3 days roughly

Why do you use QQQ but not NQ or MNQ future? The spread cost would be much lower and trading time is much longer.

 

[shatteredx]

Why do you use QQQ but not NQ or MNQ future? The spread cost would be much lower and trading time is much longer.

You're right.

I'm using QQQ because I don't have a futures account at the moment. If the strategy is profitable over 6 months, I will probably move to NQ/MNQ.

 

[Overnight]

Why do you use QQQ but not NQ or MNQ future? The spread cost would be much lower and trading time is much longer.

From what I have read, jumping from an ETF to a future can be bad business. Psychological and stuff. *shrugs*

 

[GloriaBrown]

You're right.

I'm using QQQ because I don't have a futures account at the moment. If the strategy is profitable over 6 months, I will probably move to NQ/MNQ.

Short sqqq/tqqq may be the best of all

 

[SteveM]

Short sqqq/tqqq may be the best of all

If you short them both simultaneously, you will run into a situation a couple times per year where the underlying (NQ index) will relentlessly run in one direction for 7-10 days in a row....when this happens, you will lose money on your position (simultaneous TQQQ & SQQQ short).

"It's free money most of the time. Except when it's not." - some veteran trader, somewhere

 

[GloriaBrown]

If you short them both simultaneously, you will run into a situation a couple times per year where the underlying (NQ index) will relentlessly run in one direction for 7-10 days in a row....when this happens, you will lose money on your position (simultaneous TQQQ & SQQQ short).

"It's free money most of the time. Except when it's not." - some veteran trader, somewhere

I mean just choose either one, not arbitrary trade . But even arbitrary trade is a good idea since NQ would not be suddebly be -40 dollars oil future kind.

 

[murray t turtle]

View attachment 243813

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Exactly;
typical uptrend + typical sqqq move/feb/march in a year of QQQ uptrend
BOTH are not designed for long term investors; but fun multi hundred page read on their annual report/if one likes to read .I do...………………………………………………………………………………………………………………………………………………………...

 

[shatteredx]

Got bored again so I looked at going long NQ vs shorting SQQQ. I normalized the leverage of NQ based on drawdown.

total log returns trading normally NQ: 353% (40% drawdown)
total log returns shorting SQQQ: 365% (40% drawdown)

(these results are from an overly fitted backtest, not actual profits)

So shorting SQQQ is 3% more profitable per trade than trading futures.

HOWEVER, this does not include fees and more importantly, does not include the much more favorable 1256 tax treatment of futures. You will save at least 10% on taxes in the USA trading futures compared to equities.