DDM = 2x Dow30 ETF EWZ = 2x Brazil ETF Original poster is looking to get exposure to the Dow, trad3r how is Brazil going to get him exposure to the Dow 30? Cutten, I agree about the risks but the chances of the index (we're talking the Dow here) falling 50% in a day is slim to none - and if it did, we'd be at limit down on the NYSE and halt trading. I can see that the index could fall sharply over the period of a week or two, add in some large spike up days and with compounding you could easily wipe out 50% of your capital in a short time period as compared to a years holding period.
I have been trading DDM for the long term..but I have also been trading DXD to offset the big moves...I try to trade 3 of every DDM for 2 of DDX and if you include covered calls...money can be made without any substantial risk.
It's not that bad. What might happen is that DDM does not equals 2X the Dow movement because of daily compounding, you MIGHT only get 1.5X. Altough the DDM may as well outperform 2X the Dow.
Here is a chart comparing the DDM to the DJI http://finance.yahoo.com/echarts?s=ddm#chart3:symbol=ddm;range=my;compare=^dji;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined Thoughts? EDIT: for some reason both symbols won't load with the link. you'll have to enter the DJI manually and set the time setting to max
You could also argue that the the Dow has the least to fall as 4 of its components are under 10 dollars. If they all went to zero the index would move around 150 or so points. So by default if you wanted to go long it's probably your best choice.
Whoa. Such scathing words. The way you gauge a professional is how you pay your taxes, not a chest-pounding self-proclamation. Ditto for dinking with levered ETF's. Simple answer, you watch it because everyone else does. Only 30 stocks, Not representative of "industry". Couple shills in there. INTC and MSFT. Both of which are unique ALSO being in the Nasdaq 100 and SPX. Dinosaurs are eventually removed, making the index a rig. Operative word is rig. Gains in one issue mask the carnage in another with no net change in the index. For the day or swing. Sheer magnitude. Volume x Delta of EACH issue. The specialists in these are old masters relative to the ax in the ABC company with a miniscule fraction of the daily volume. Price movement is price movement regardless whether the underlying company makes buggy whips, potato chips, or IC chips. Gee that rhymed; and.......... all extracted dollars spend the same at the hot dog stand. A couple of January's ago GM doubled in one month to $34ish. Get it?
looking at the charts of DDM versus the DJI over the past 2 years, the correlation was better than I expected with all the worries about the compounding issues. So are the compounding issues really something to worry about?
I haven't bought anything yet but I'm also considering SSO versus SPY. Do I have to worry about SSO compounding issues over a 1 year time frame? 3- 5 year time frame? 10+ years? Here's a chart of SSO vs. SPY . You can expand the time period to cover 682 days http://stockcharts.com/charts/performance/perf.html?SSO,spy