Sell crypto for profit or hold
- Thread starter nrt89
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yes, if you have time, please elaborate on this. You will enlighten many.
My opinion is dump then stay out
Too risky and if you want a bigger bang buy the NASDAQ
not as risky as cyrpto, which is made up money with zero backing, but pays more over long term than S&P
but the ride is rriskier and that is what you are after
at least the NASDAQ has real companies back your investment
If you want more thrill buy a hedgefund if you can afford a miilion
better way is leveraged ETF where they borrow money (leverage)
The Leveraged Rocket Ride (3x ETFs)
Too risky and if you want a bigger bang buy the NASDAQ
not as risky as cyrpto, which is made up money with zero backing, but pays more over long term than S&P
but the ride is rriskier and that is what you are after
at least the NASDAQ has real companies back your investment
If you want more thrill buy a hedgefund if you can afford a miilion
better way is leveraged ETF where they borrow money (leverage)
The Leveraged Rocket Ride (3x ETFs)
- What it is: ETFs that use derivatives to deliver 3x the daily return of an index like the NASDAQ (TQQQ) or S&P 500 (UPRO). In a bull market, they soar. In a downturn, they implode with terrifying speed.
- Why it's thrilling: Pure, liquid, amplified market exposure. You can watch your money double or halve in weeks. The daily volatility is a rollercoaster.
- Best for: Believers in a strong, short-term directional move who want maximum market impact without options complexity.
- Ticket: TQQQ (3x NASDAQ)
treat it like handling explosives
write down your plan beforehand. "I will buy $X of TQQQ. I will sell if it hits a $Y profit or a $Z loss. I will not add more money if it drops.
this is like a casino if you chase your losses you are doomed
if you think you will chase losses stay out
if you win stay out
better yet just stay out
BTC dying slow death now. The geopolitics of this world will prevent its adoption as a first tier currency and many of the retail holders are now getting out and jumping onto the metals mania Bandwagon. Gold has been, and will continue to be, the global diversifier and safety met. We are only in the third or fourth inning of that. Copper is in the second inning - watch it go for next couple years.
I would not say leveraged market index investment is for risk-seekers or that it is like a casino. It still provides the same expected (excess) return-to-risk ratio as a regular stock index. It is a great investment strategy if you are investing long-term (10 years at least, preferably 20). Just do not look at it and do nothing, no matter what happens in between. If you enter into them slowly (e.g., every 3 months during a 5-year period), and exit from them at the same speed, the risk will be lower. This is a great investment for people under 45 planning for retirement (start entry in your 20s, start exiting and reallocation into a regular stock index when you hit 50). But, of course, if you do it while still holding more than a minimal emergency fund in cash-like assets, you are doing it wrong.
It looks like a long term play but it is not
If the Nasdaq‑100 goes on a long, mostly smooth bull run, TQQQ can be spectacular.
If the market gets choppy or enters a bear market, TQQQ can destroy capital.
That’s why professionals classify it as a trading instrument, not a long‑term investment — even though long‑term holding can work if you accept massive drawdowns.
The issue is daily leverage reset. TQQQ targets 3× the daily move, not the long‑term move. That creates something called volatility decay.
When markets get choppy:
- Gains don’t compound cleanly.
- Losses compound faster.
- Sideways volatility eats away at the ETF.
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E(3*Rm-2*Rf)=3*E(Rm)-2*E(Rf). No matter what markets do, the math remains the same. Even "professionals" cannot affect it.
so you agree with me? I dont do math
it is simple
TQQQ aims for 3× the daily percentage move of the Nasdaq‑100. Not weekly. Not monthly. Not annually. Daily.
Because of that, the fund must rebalance every single day to maintain 3× exposure. That means the return depends not on where the index ends up, but on the sequence of moves along the way.
It has to adjust every day or it would no longer be 3X the index at the end of the every day.
You will do 3X for the first day only
Over time, daily adjustment destroys the 3X the index concept
Nice try though
Why stop at three ? Go ten times and become a billionaire
If it was that easy it would still not work as everyone would do it AND IF EVERYONE DID IT the dynamics change then it would still not work
If it worked why not go 4X the TSX instead? Less volatility but even more profit
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OK, more math:
E(3*Rm-2*Rf)=3*E(Rm)-2*E(Rf)
st.dev(3*Rm-2*Rf))=3*st.dev(Rm)
beta(E(3*Rm-2*Rf))=3*beta(Rm)=3
So, I think it is pretty clear from these formulas what I am trying to say. And rebalancing has nothing to do with it.
P.S.: Please, tell me you are joking when you say "I dont do math". Finance is math, not much else to it, especially when we are talking about an individual small investor. Basic probability theory, to be exact. I think, it is covered in grade 12 math - too bad they do not use investment as an example when they teach it.
i am thinking math but formulas not required
to keep proportions right on a up day the etf buys more - through derivatives - meaning they buy high
on down days they have to sell exposure meaning they sell low to the counterparty on the other side of the futures/swap derivatives trade. There is no cash pool it’s just a realized trading loss.
if market goes sideways the etf lags behind because of this volatility drag
buying high and selling low is the built‑in structural drag of leveraged ETFs. It’s not a mistake or mismanagement; it’s the mathematical consequence of maintaining constant leverage.
formulas not required to understand
they are used by short term traders in and out within days if not hours
it will work when the market goes straight up but this is not meant for the
unsophisticated to play with
Leveraged ETFs give you 3× the daily move, not 3× the long‑term move.
a regression analysis of TQQQ shows significant negative apha as you put in 3 times the capitol but get less than 3 times the return
so you are saying the beta is 3? but you are not considering volatility drift ?
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Please, explain how. The math does not lie. Please, use formulas to show how to get a negative alpha: no formulas = no math. The only way it may be is through the difference between the borrowing and lending interest rates (something to be expected for leveraged investment) and bid-ask spread. called CAPM with transaction costs. Another way daily vs. annually makes a difference is if there is the autocorrelation of stock returns, but it has been disproved a long time ago once transaction costs are taken into account
i am getting tired of explaining as I said I dont do formulas but here is the math logic
TQQQ is designed to hit a multiple 3x of the index’s daily return. They reset their leverage every single day to maitain this multiple and that is why they are minus alpha
The Math: In a flat but volatile market, this kills returns. If an index drops 10% and then rises 11.1% to break even, a 3x ETF drops 30% and then rises 33.3%. The result? The index is flat, but the 3x ETF is down -6.69%
The Reality: TQQQ (3x Nasdaq) delivered a 5-year Compound Annual Growth Rate of 22.9%. To actually achieve 3x long-term returns, it would need to be near 48% (3x QQQ’s 16.1% return). It fell far short
The Hidden Cost of Swaps (Financing Drag)
This is arguably a bigger killer than volatility decay. To get leverage, these funds use swaps. The interest paid on these swaps is a massive hidden cost that is not included in the expense ratio.
- The Scale: For single-stock leveraged ETFs, borrowing costs can hit 19-20% annually.
- The Consequence: Investors holding these funds are paying credit-card-level interest rates for leverage, silently deducted from their daily returns.
There is one specific scenario where leveraged ETFs can beat the index: strong, sustained trends with low volatility. Because of the daily reset , a 3x ETF in a steadily rising market will actually achieve >3x returns (compounding works in your favor) .
Now we are getting somewhere. Your example with going down and then up makes no sense since the reverse scenario (going up and then down) would lead to the opposite result and, therefore, do not affect the expected value. What you are actually telling is that the effective borrowing rate used by TQQQ is much higher then risk-free interest rate and even higher than what people can borrow on their own to invest on a margin. This, indeed, will lead to negative alpha (which is a straightforward conclusion from CAPM formula - try to use formulas, they make life much easier). Conclusion: Do not invest in ETFs that use swaps instead of a straightforward leveraged investment. IMO, the main reason for using swaps is to switch income from dividends to capital gains, which have a lower tax rate.
BTW, investing on 3x margin does not increase expected return by 3 times, it increases the expected excess return (difference between the expected return and risk-free rate) by 3 times. E.g., if market return is 10% and risk-free interest rate is 4%, then excess market return is 10-4=6%. So, 3x leverage will give you 4+6*3=22%, not 10*3=30%. You can also compute it as 3*10-2*4=22%. Of course, if you borrow at a higher rate, your expected return will be lower while beta remains at 3. In particular, your alpha will decrease by 2*premium, where premium is the difference between borrowing and investment risk-free interest rates: e.g., if you borrow at 4.7%, your expected return will be only 3*10-2*4.7=20.6%. Or, using CAPM, you will have 20.6=alpha+3*(10-4), thus, alpha = 2.6%, which is exactly 4%-2*0.7%, i.e., it alpha decreases by 2*0.7=1.4% from its theoretical value of 4%)
Just saw this thread now, but if you're still holding I'd say we are mid bear and if you didn't care to sell at $ 3.50/5k respectively, just hold or DCA and guess the bottom. Judging from 3 previous crypto cycles, coins pullback 70 - 90% from ATH's. BTC and ETH pulled back about 77%, SOL probably 90%I have small profit at this point with crypto. I am tired of these up and down. Would you guys recommend selling or holding it. It small part of my portfolio, it is made up of xrp and eth. I have never taken a profit and I regret not selling it earlier
Who is missing something here. I think it is you.
The leveraged etf adjusts daily to keep the exact mutiple. They do not hold.
That is the issue you are not understanding.
That and the cost of swaps, ETF has a swap agreement, with a bank, to receive a multiple of the index's return in exchange for a fee
