Holding 3x etf long term

Discussion in 'ETFs' started by highrisk, Oct 18, 2017.

  1. highrisk


    I know holding leveraged etfs is a no no in general. However what if someone has more risk tolerance and less tendency to do active opportunistic trade.
    Buy tqqq or spxl and hold.
    Put a stop loss - based on historical pull backs (say 25%) or (may be even use some other Technical criteria to get out)
    Once sell activated - buy back in small portions over a time period say six months

    Argument is market broadly go up, and if they go down tend to start recovering by 6-12 months

    I know somewhat vague here. But i am looking for ideas to use my situation right now which allows me take higher risk for next few years (but not so much into active trading, dont mind once in a while).

    Any feedback in terms of best etf and entry and exit strategy
  2. Robert Morse

    Robert Morse Sponsor

    If you want more action for your buck, some ETFs have futures. They act like the index over time and better meet your requirement. Or, use options as a stock replacement. I'd say these are better at meeting your risk tolerance.
  3. Metamega


    It really has nothing to do with risk, it has to do with how those ETF's are built and their decay over time.


    If you we're to read the leverage ETF disclosure from the issuer it will say somewhere this instrument is designed for intra-day trading.

    Take a leveraged etf and a similar non leveraged ETF and compare their returns over 3 months, 6 months, a year or even longer and see if it's still the right investment.
    VPhantom and Robert Morse like this.
  4. truetype


    "Decay over time" is an urban legend that's been addressed many times on this site and elsewhere.
  5. There are times when holding a leveraged ETF long term will do you harm.... volatility against you, cost decay.

    There are other times when holding a leveraged ETF long term... is exactly the right thing to do.

    Likely would be worth your while to learn the difference.
    Last edited: Oct 18, 2017
  6. highrisk


    Thank you all for your replies
    @ Robert Morse - i worry about the time decay and expectation factored into option pricing. I have made money only a few times buying options it usually due to implied volality/ expectation. I will never bought futures, but would it not have similar decay (carry over costs) - probably should read up on it before i ask more questions

    @ metamega - thanks for pointing out the decay. It does worry me, atleast in theory - but i wonder on practical terms - does the major upside of riding a good market balance out the slight downside of fluctuating market. Assuming one can take out the sharply dropping market using stop loss.
  7. 777


    When would you say "holding a leveraged ETF long term is the right thing to do"?
  8. When you catch a longer move. For example, run a relative chart of the QQQ and TQQQ... leveraged Nasdaq... or some other period in energy when the price of oil was rising.
    truetype likes this.
  9. 777


    Oh... you can look into the future and time the market well enough to outrun decay, fees, intrest paid on a 3x ETF.

    Good for you. I won't pester you for you secrets but I will wish you all the best spending your future billions.
    Last edited: Oct 18, 2017
  10. SHUT YOUR PIE HOLE! Just run the charts. The "decay" is small and not all that fast compared to the leveraged rise in prices. GEEZUS CHRIST! How dense can you be?

    You've obviously already listened to other dumbasses who pontificate, "its always wrong to play a leveraged ETF", so why bother to ask the question? With that conclusion, YOU'RE TOTALLY FULL OF SHIT! The charts tell the tale. You're obviously an IDIOT!!

    The issue is not, "can YOU cope with the volatility of leverage"? Not whether doing so correctly is a benefit.
    Last edited: Oct 18, 2017
    #10     Oct 18, 2017
    comagnum likes this.