I've been looking at the $QQQ3 for a really long time and I currently have over 100K in it myself. As long as the Nasdaq doesn't fall 30% in one day, there is no risk of a total loss.
The biggest risk is psychological. In a bear market, the ETF can fall by 80 or 90%. If you have all your money in it, that is of course psychologically brutal.
Just take a look at the long-term chart and there are also various backtest calculations which show that the returns are astronomically high. So far it's worked great and I don't see why it shouldn't continue in the future.
However, I would tend to get into a leveraged ETF after an index fall of at least 20% and not at an all-time high.
The biggest risk is psychological. In a bear market, the ETF can fall by 80 or 90%. If you have all your money in it, that is of course psychologically brutal.
Just take a look at the long-term chart and there are also various backtest calculations which show that the returns are astronomically high. So far it's worked great and I don't see why it shouldn't continue in the future.
However, I would tend to get into a leveraged ETF after an index fall of at least 20% and not at an all-time high.
•
22
•
2Lun
@MoneyGame do you sell when you fall below the 200 MA?
••
@qube_inv No, I don't intend to. I know that many people do this to reduce volatility and get back in when the 200 MA is exceeded. In that case, I'll just sit it out.
•
22
•1Lun
@MoneyGame Hi, as I am still learning about the risk of leveraged ETFs, I wanted to ask what you mean by exceeding the 200 MA? (Because I don't understand that)
••
@Lindi87 MA stands for Moving Average. In other words, the moving average price of the last 200 days. Many who trade leveraged S&P 500 and Nasdaq ETFs sell when the price falls below the "200 MA price" and only get back in when the price exceeds the "200 MA price" again. This avoids the phases in which the ETF has fallen by 80+% in some cases. https://www.reddit.com/r/LETFs/comments/19bbdcu/200_ma_confusion/
•
11
•1Lun
@MoneyGame Thank you for the quick reply
••