The Benefit of 3X ETF Investing
One of the more favorite types of 3x ETFs has been created by Direxion. The power of these 3x ETFs is that an individual might win in both up and down markets since the 3x etfs come in regular and inverse 3x etfs, and these are sometimes called bull and bear etfs.
The true power of a 3x ETF is that it will move 3 times as fast as the regular index so a Bull 3x ETF of the S&P 500 will move up 3 times faster than the S&P 500 index called SPY. So if SPY moves up 2%, the 3X ETF will move up 6% or 3 times the SPY index ETF.
There are times like now and in 2007 that the stock market gets very overbought and brings about an excellent time for the use a Bear 3x ETF because when markets get extended to far they tend to fall fast and the profits from a 3x ETF like those from Direxion can easily bring 20% to 30% profits and then when the market turns up a person should buy the Bull 3x ETFs and take advantage of the market recovering.
1/27/2012 Here we see that the 3X Direxion Small Cap ETf called TNA has had a nice run. Note how it stays above the Arps Blue Stairsteps which is a buy signal. This can reverse and go under the red stairsteps at any time. We highly recommend Esignal Charting Software and the Jan Arps' Traders' Toolbox Crown Jewels Add-On.
One of the more popular 3x etf industries is high tech and some people like to use the 3x etf investment called Proshares Ultra Pro QQQ or symbol TQQQ, which is a bull 3x etf that moves up 3 times the QQQQ etf index. It is best that you use charts to determine when to buy this 3x etf and when to exit the investment. We always suggest that you use stop losses or trailing stops as you investment starts to climb. This chart of TQQQ shows in the Esignal Chart that the etf is moving up and moving above the green stair steps. At the same time the Fear/Greed indicator shows us that the Bulls are in control since the bars are green. We highly recommend that you use Esignal Advanced Get and us the Arps Fear/Greed indicator as well as the Arps Trender, which is the blue stairsteps. When the stairsteps turn red then that is a sell signal. We have found the Arps indicators to be a good system for buy and sell indicators and takes the emotion out of trading etfs by making the system mechanical.
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