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Shorting x2 & x3 leveraged ETFs

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Shorting x2 & x3 leveraged ETFs

 

Leveraged ETFs which are rebalanced daily give a distinct advantage to short traders.

 

http://www.alphaplot.com/a-guide-to-shorting-leveraged-etfs/

 

So ideally, short a leveraged bear fund if you want to go Long on a sector that you think will go up, or short a leveraged Bull ETF if you think the market will go down.

 

Some idea... shorting DUST (x3 leveraged gold miners) if you want long exposure to gold miners.

 

http://bigcharts.marketwatch.com/kaavio.Webhost/charts/big.chart?nosettings=1&symb=DUST&uf=0&type=128&size=3&sid=5847910&style=320&freq=1&entitlementtoken=0c33378313484ba9b46b8e24ded87dd6&time=9&rand=691980627&compidx=aaaaa%3a0&ma=3&maval=144,89&lf=268435456&lf2=4&lf3=2&height=820&width=720&mocktick=1

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Leveraged ETFs which are rebalanced daily give a distinct advantage to short traders.

 

http://www.alphaplot.com/a-guide-to-shorting-leveraged-etfs/

 

So ideally, short a leveraged bear fund if you want to go Long on a sector that you think will go up, or short a leveraged Bull ETF if you think the market will go down.

 

Some idea... shorting DUST (x3 leveraged gold miners) if you want long exposure to gold miners.

 

http://bigcharts.marketwatch.com/kaavio.Webhost/charts/big.chart?nosettings=1&symb=DUST&uf=0&type=128&size=3&sid=5847910&style=320&freq=1&entitlementtoken=0c33378313484ba9b46b8e24ded87dd6&time=9&rand=691980627&compidx=aaaaa%3a0&ma=3&maval=144,89&lf=268435456&lf2=4&lf3=2&height=820&width=720&mocktick=1

So am I being thick, if you want to short DUST, not as I would at present, why not simply buy NUGT?

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So am I being thick, if you want to short DUST, not as I would at present, why not simply buy NUGT?

 

Because in buying a leverage fund the daily rebalancing still works against you, especially in volatile markets. You do not get anywhere close to x3 return on the long side unless there are zero down days.

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http://uk.reuters.com/article/us-catalyst-fund-etf-idUKKBN0TW0TX20151213

 

"Miller's base case is that most leveraged ETFs are poorly designed because the nature of compounding wipes out their gains over time."[/size]

Having followed LSIL for far too long, I'd say being the wrong side of the trade doesn't need much compounding help.

 

Get the point being made though.

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Because in buying a leverage fund the daily rebalancing still works against you, especially in volatile markets. You do not get anywhere close to x3 return on the long side unless there are zero down days.

 

 

You are correct.

But if you are short, and the share prices runs against you, you can lose money very fast

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