Why don't I just load everything up SPXL?

Sure Chap · Nov 15, 2015

If you can't beat the S&P 500, why not just load everything up on it's triple leveraged etf? I'm still new to trading and I'm still trying to find a good strategy, but I think SPXL is a pretty safe bet. Eventually I want to day trade the SPXL, but until I gain more experience would it be a good idea to just invest in the SPXL?

Visaria · Nov 16, 2015

i would suggest you buy very long term options on SPY.

benwm · Nov 16, 2015

Or borrow money from friends and family to give yourself a pro's stake. And then write put options on the indexes. What could go wrong? The best way to transition from a beginner to advanced is throw yourself in at the deep end.

gkishot · Nov 16, 2015

Sure Chap said:
If you can't beat the S&P 500, why not just load everything up on it's triple leveraged etf? I'm still new to trading and I'm still trying to find a good strategy, but I think SPXL is a pretty safe bet. Eventually I want to day trade the SPXL, but until I gain more experience would it be a good idea to just invest in the SPXL?

Why not let's say 70% SPXL, 30% cash and rebalance it annually.

Sig · Nov 16, 2015

Do you understand that SPXL rebalances daily, so if SPX goes up by 20% in a year SPXL probably will not go up 60%? You'd have to rebalance your position daily to actually get 3X returns, but of course you'd lose on transaction costs.
Why wouldn't you just buy ES futures?

Cswim63 · Nov 16, 2015

Sure Chap said:
If you can't beat the S&P 500, why not just load everything up on it's triple leveraged etf? I'm still new to trading and I'm still trying to find a good strategy, but I think SPXL is a pretty safe bet. Eventually I want to day trade the SPXL, but until I gain more experience would it be a good idea to just invest in the SPXL?

A better idea would be to just send your trading capital to your favorite charity where it will have a nice home. Or just send it to Swimr. It won't have as nice a home but it will definitely enjoy itself.

benwm · Nov 17, 2015

Sure Chap said:
I'm still new to trading and I'm still trying to find a good strategy

Being serious, you need to work on a strategy. This can take months or more likely several years. Leveraging up 3-fold in stocks is "probably" not a good idea. You might get lucky but in this business there are no short cuts (for most of us).

Sure Chap · Nov 17, 2015

Sig said:
Do you understand that SPXL rebalances daily, so if SPX goes up by 20% in a year SPXL probably will not go up 60%? You'd have to rebalance your position daily to actually get 3X returns, but of course you'd lose on transaction costs.
Why wouldn't you just buy ES futures?

I still new to futures, but yes I think that is the type of strategy I'm looking for. However, I think I need to do quite a bit more of paper trading before I jump into futures. I've had bad experiences with the leverage of options. I think futures is even more leveraged?

Sure Chap · Nov 17, 2015

benwm said:
Being serious, you need to work on a strategy. This can take months or more likely several years. Leveraging up 3-fold in stocks is "probably" not a good idea. You might get lucky but in this business there are no short cuts (for most of us).

Thanks benwm, I think I'm jumping into this game too fearless. I need to step back and trade small amounts first. I kind of got excited when I found out there was an etf for S&P 500, even better yet triple leveraged

VTS · Nov 19, 2015

Most of the world has all but run out of reasons to buy the S&P 500 at this late stage in the recovery, and you want to triple up your leverage on it?

If there is a recession, and nobody can predict that with any accuracy at all, but IF there is one soon, it's not that far fetched to think the S&P 500 could fall 30% or more. What do you think happens to your account that is entirely allocated into SPXL if stocks fall just 30%?