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DoubleTop

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DoubleTop

Re: snootmagruder post# 1516

Saturday, 03/07/2009 3:36:11 PM

Saturday, March 07, 2009 3:36:11 PM

Post# of 1807
If the underlying fund goes Down 5% on Day #1
then it must go UP 5.263% on Day #2 to "Recover 100%".

Therefore in the 3X Fund ...
Day #1 it does Down 15% (-5% x 3) from 100% to 85%
Day #2 it goes Up 15.789% (+5.263% x 3) from 85% to 98.42%

Not quite as bad as your math states.
Yes there is a slow and constant loss in 2X & 3X funds due to the math.
But it will be insignificant if you invest Long/Short correctly.
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