Cycle Trading

[Duma]

I have seen article after article about what they call "3X Creep" and the articles alway say that holding 3X funds for a long time is not good.

This is totally false. If the market is rising 3X creep works in your favor. If the market is declining, it will work against you.

I entered my TQQQ RSI trade on 3/21/19. That was almost 2 months ago and look at what has happened.

For a $10,000 account it would have taken 58 shares of QQQ to be fully invested (100%), but only 65.5 shares of TQQQ. Because TQQQ is a 3x fund, only 1/3 of the cash was required to fully invested.

I just checked the values of QQQ and TQQQ a few minutes ago. The account with QQQ would be wroth $11,053, but TQQQ account would be worth $11,098 for an extra $45. That doesn't sound like much but it translates into a 11% gain for the account holding TQQQ, but only a 10.5% gain for the one holding QQQ.

Yes, 3X Creep is real and it can and will add dollars to your account.



There is an investment strategy that also takes advantage of this, but it requires a market that moves to be successful, either up or down.

If you had bought TQQQ at YE, it would be up 81% as of now. If you had also bought an equal amount of SQQQ you would be down -49%. If you had bought $10,000 of each one, your $20,000 investment would be up 16.2% due to creep.



So bottom line, creep is good if you know how to use it. As long as the general market direction is up, creep will work in your favor all the time.