My personal experience shows 3x etf is not a fair game

[kalmar]

Have a look on their prospectus:

MCXAX_Presentation_--_2015_Q3 by zerohedge
https://www.scribd.com/book/294465751/MCXAX-Presentation-2015-Q3

 

[murray t turtle]

I don't fully understand the math, but I recommend checking out pages 1-11 of Jian Zhang's 2010 PhD thesis, "Path-Dependence Properties of Leveraged Exchange-Traded Funds: Compounding, Volatility and Option Pricing" at https://www.math.nyu.edu/faculty/avellane/thesis_Zhang.pdf , especially equation 2.1.4 on page 10, which attempts to predict the price of a leveraged ETF after many rebalancing periods, given certain statistical assumptions about the movement of the underlying.

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NOT a prediction; they work well with a good trend...... Counter-trends may , or may NOT work as well X3...
My remarks are mainly for experienced investors///traders; NONE of those pay dividends except maybe a 2X SPY something ETF, does or did dividends.LOL. The3X managers , if they get a dividend simply record it; i prefer they pay it[put it in my account]-NOT with me having to ask for it; but it takes all kinds to make a market...............................................................

 

[murray t turtle]

I bought some oil 3x bull etf for fun in early december 2015, it was around $6 while oil future was around $40. Now is around 3 months later, oil future is back to around $37.5 but the etf price is only around $2.5 which is not even half of $6. I know there are factors like contango and etf management fee but this is just 3 months time period. If anyone can show some explaination or math would be very helpful. Luckily I just bid very small amount of money.

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GloriaB; You see why trader Robert Tharp warned ''never try to catch a falling safe''?????
If you have time read most of prospectus, i think its a bout 555/+ pages, but real helpful, more so than counter-trends. Wisdom is profitable to direct

 

[GloriaBrown]

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GloriaB; You see why trader Robert Tharp warned ''never try to catch a falling safe''?????
If you have time read most of prospectus, i think its a bout 555/+ pages, but real helpful, more so than counter-trends. Wisdom is profitable to direct

it is not always true. The japanese trader can catch the failing knift at the best timing

 

[lawrence-lugar]

it is not always true. The japanese trader can catch the failing knift at the best timing

I agree...nothing in Trading should be etched in stone_
Every lesson or point...has an equal counterpoint or side...that can be equally just as right.

 

[murray t turtle]

it is not always true. The japanese trader can catch the failing knift at the best timing

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Maybe , on a knife; he said not to try to catch a '' falling safe''

 

[murray t turtle]

I bought some oil 3x bull etf for fun in early december 2015, it was around $6 while oil future was around $40. Now is around 3 months later, oil future is back to around $37.5 but the etf price is only around $2.5 which is not even half of $6. I know there are factors like contango and etf management fee but this is just 3 months time period. If anyone can show some explaination or math would be very helpful. Luckily I just bid very small amount of money.

55
Another problem;
plenty of cash dealers got in trouble, during oil downtrend, then they had to sell. Like BEAR Stearns had to sell + JPM did not pay much for what they called a ''burning house''..................

 

[GloriaBrown]

Can somone shows how my UWTI is still not even half of its bought price? I bought at around $60 in early December 2015 while the spot price of Brent was $36.93. Brent is $50.48 now but UWTI is only around $29. The Premium / Discount is almost zero at the time I bought and now.

 

[humbletrader2016]

Imho, the maximum holding period is no longer than 2-week and the best strategies to trade this type of leverage products is MOMENTUM strategies. That said, trying to trade strategies such as oversold/overbought or support/resistance levels will only make your brokers/exchanges happy.

 

[toonerdy]

GloriaBrown, comparing to the OIL ETF, it appears to me that only about a fifth of of UWTI's loss can be attributed to "volatility drag" leverage rebalancing effects (as discussed in the paper I linked to in my March 9th, 2016 posting in this thread). The bulk of the loss was, I suspect, due to futures contango.

From the close on Decmeber 4th (when UTWI closed closest to $60 in early December), 2015 to yesterday's close, OIL and UWTI moved thusly (close prices adjusted for splits and dividends, from Yahoo):

Your recollection of oil spot prices: $36.93 --> $50.48 (up 36.7%)
OIL: $7.22 --> $6.18 (down 14.4%)
UWTI: $59.90 --> $27.47 (down 54.1%)

Triple the drop in the OIL ETF (14.4% x 3) is a loss of 43.2%, which is 79.85% of UWTI's 54.1% loss.