Leveraged ETFs Trading Insights and Market Outlook

Andrew profited significantly today by trading leveraged ETFs SQQQ and SPXL during a market sell-off.

### Trading Strategies with Leveraged ETFs: Insights and Experiences
* 📈 Andrew from Peak Capital Trading shares his profitable trading day, focusing on leveraged ETFs **SQQ and SPXL**, while clarifying he did not trade **TQQ**.
* 💡 Leveraged ETFs allow traders to **capitalize on index movements more efficiently**; for instance, if QQQ rises by 1%, TQQ increases by **3%**, while SQQ moves **inversely**.
* 📉 With the market gapping down due to recession fears, Andrew went long on SQQ, benefiting from a **favorable trading pattern and high volume** as he anticipated **further market declines**.
* 🔄 He also executed a reversal trade with SPXL, which offers **three times the leverage** on SPY, making it a **more capital-efficient choice** for day trading.
* ⚠ However, he cautions that leveraged products can experience **decay over time**, especially in a bullish market, and that their daily chart levels lack significance since they are **derivatives of underlying indexes**.
* 📊 Andrew emphasizes the importance of trading based on **index levels** rather than the leveraged products themselves, comparing it to "**buying clothes for your shadow**."
* 💰 He successfully traded SQQQ for a break of the day's high, noting that while SQQQ rises as the market drops, TQQQ behaves **inversely**, highlighting the **leveraged nature** of these products.
* 📉 Concluding with market outlooks, Andrew expresses skepticism about a market rebound, expecting **continued volatility until economic conditions improve**, and encourages viewers to **engage with their trading community**.

Hello everyone, Andrew here from Peak Capital Trading. Mike is in the back for those of you who are part of our team. Mike is working from the office today. Anyways, today was an amazing day for me trading-wise, very profitable, very good. I traded leveraged ETFs, **SQQ** and **SPXL**.

Sorry, actually, I didn't trade the **TQQ**. I traded **SQQ** and **SPXL**. So leveraged ETFs are the instruments that you can trade the indexes instead of indexes. You can trade them, and they're more capital efficient. Like if NASDAQ **QQQ** goes up one percent,

**TQQ** goes up three percent, and also they have reverse **SQQ**, like, like a short **SKQ**, dropped three percent. So today the market was gapping down, obviously because of the fear of recession and tightening the economy, and I was expecting that the

market is going to continue setting up. Therefore, I went long **SQQ**, which is essentially the short for **QQQ**, which is the NASDAQ sector, and it was really, really good because the pattern was really nice. The volume was great, and I shorted the market by going long **SQQ**, and

then the **SPY** sold off at around the level about 390. This was the level that on November 1st we were holding, and then I decided to take a reversal from that level. I could buy a **SPY** for the reverse sell, or I can just buy a leveraged ETF in

this case, **SPXL**, which is the long for a **SPY** but on a three times leverage. These are more capital efficient to trade. Why? Because for your, for example, $1,000, if this buy moves one percent, you make $100 or $10. But for **SPXL**, you can actually have three

times of that value in your uh account. A lot of people are reading a spy and trading a spy or trading QQQ, but if on an intraday, just for day trading, you can actually trade these leverage products. But the disadvantage of leverage products are decay over time if the market

for example is continue going higher or years and years. The leverage for the reverse one, they're significantly going down. But if the market is continue going down, like what we are having in 2023, the even the long ones like TQQQ or SPXL are

going to continue dropping down much much faster because they're leveraged, they're derivatives. Another lesson that I show in the recap is that the levels on this leveraged products on a daily chart doesn't have any meaning. A lot of people are trying to put the levels and you

know channels and trend lines. These are derivatives, they don't have any characteristics or personality by themselves, they just follow daily the indexes that they have. It's like having buying clothes or sizing your shadow, it doesn't matter, it's following you, so you

find the level on the indexes and then you trade them based on the levels of the indexes on TQQQ or SQQQ. I hope you like this recap and if you have any questions, feel free to leave it here. And if you like our channel, subscribe to our

channel or check our community that when I trade these ones for you live in front of you with my screen sharing. Hopefully to see you in the chat. If not, just leave your comment down there and I'll get back to you guys. Thank you guys. Today market sold off and as I discussed, you

You know, there is definitely probably no reason for the market to go back up. So, the market is going to continue, uh, you know, be choppy in the next year until the rates are going to come down. And when the market is really going down the way, what you can do is you can trade

indexes, leverage ETFs like SQQQ. They're actually opposite of exactly the opposite of, uh, QQQ but on a leveraged product. So, today I traded the SQQQ for the break of the high of the day. I obviously what I saw was that the market was selling off and

because the market was selling off, I could either go short QQQ or I go short TQQQ, or I can just go long SQQQ. I went long at 46.40 and, you know, a huge pop-up on the pullback. I added and continued going higher and higher and as

you see, all the way up to 48 that I got out completely. So, that was one of the best trades that I had. I made a really, really decent profit on that. And after that, I kind of was done trading. But as you see here, it went up all the way up

to 49.20 when the market really bought them. And again, this is very important that this price action is exactly, exactly the opposite of, uh, QQQ but on a leveraging, right? So, now I'll bring this one next to each other. I think, uh, you

know, uh, Santiago can do later, edit that in a way that you can see. So, as you see the market is sold off, you can actually go along the SQQQ. So, if the market is dropping one percent, SQQQ is going up three percent. It's an inverse, the same

as the reversal C of that is tqq so these are derivatives so the tqq for example here is you know selling off significantly let me actually put the tqq the tkq is down 10 because the market is down over 3.3 percent so that drop is

because tqq is following the market on a leveraged basis um on a long side when the market is dropping three percent this one is dropping ten percent so now the question here is that can you draw levels on that so if you go for example on the level on

a daily chart can you find these levels on tqq or sqq the answer to that is no these are derivatives these are actually following the price action of the indexes so if you have to want to find the level on them like uh you know to

trade the reversal or something you have to trade based on the indexes that they're following not themselves it's like buying a cloth for your shadow you know the shadow doesn't have any personality itself you try to close on so this is very very important for you

guys to remember the trade that I did on a spy it was exactly like based on that so spy did the balance I knew it's going to bounce from 390 41 this balance I was expecting that spy is going to do this bounce from

here so as you see there's a double bottom that didn't bounce so what I can do is I can go long a spy at 390 41 or I can just look at the spxl and as soon as the Spy hits this one I go long spxl and

that's exactly what I did so this is SPY and this is SPXL see as you see here exactly the trade that you're seeing it I went long and I we just got this from 60 to 66 at 60 cents but this level by itself doesn't have

any meaning this level actually came from the fact that the SPY heated uh I SPY here at this level of 39 so that's very important for you guys to remember so TQQQ and SQQQ are derivatives they're only for day trading they're tracking

exactly like the market but on a more leveraged uh way so they're three times leverage so SQQQ is for a short so if the market is going down SQQQ is going up TQQQ is on the long so if the market is

going up TQQQ is also going up by three percent so there are really you know things that you should not really hold for a longer term because if you go for example on the longer term you may actually get rid of this pivot points so on the longer terms so there you know

a SPY is always going up but you know SQQQ which is following that you see it always going down because the market is going up and these are constantly losing their value so the market is extremely weak to the accused down three percent we're probably gonna continue selling

off queues are probably gonna go to 250 Market is definitely uh not doing a good time at all and I think it's going to be a really bad end of the year it's just because there's no reason for the market to go up the Federal Reserve wants to

shrink the economy everyone needs to, you know, you know, to take care of their money for now until this cycle goes on and the inflation comes down. Perfect guys, thank you so much for watching this and if you have any questions guys feel free to email me. Now I will see that SPY

is bouncing a little bit here from this level, but again you know I I really doubt that SPY is gonna, yeah, SPY is probably gonna continue heading lower over the Christmas or maybe just continue chopping between 350 to 400 until uh, you know, the economy comes back

and to the solid area. But overall I had two trades, the SPXL was really really nice. I did a bounce on SPXL from this level just again the trade that I did here was because of QQQ again as because of uh, looking at a SPY at that 390 level and

then obviously I had the SQQQ long because the market was selling off at the open and I went long exactly as you see, you know, this beautiful move that we got on that. Thank you so much guys, have a good day and uh see you tomorrow in the

What is TQQQ and SQQQ and How to Trade Them

Bear Bull Traders

Andrew details a profitable trading day using leveraged ETFs, specifically SQQ and SPXL.

Clarification that TQQQ was not traded, focusing on SQQ and SPXL as more capital-efficient alternatives to trading indexes directly.

Market gapped down due to recession fears and economic tightening; anticipation of continued market downturn.

Long position in SQQ (short QQQ) due to a favorable pattern and volume; shorting the market effectively.

Reversal trade at the SPY 390 level; considering buying SPY for a reverse sell or using the leveraged ETF SPXL (3x long SPY).

Advantages and Disadvantages of Leveraged ETFs

Explanation of the capital efficiency of leveraged ETFs; example of increased returns with SPXL compared to SPY.

Discussion of the disadvantages of leveraged products: time decay, especially in prolonged upward market trends for inverse ETFs.

In downward markets, even long leveraged ETFs like TQQQ or SPXL drop significantly faster due to leverage.

Significance of Levels on Leveraged Products

Daily chart levels on leveraged products lack meaning; they follow the underlying indexes.

Analogy of buying clothes for one's shadow; leveraged products mirror the indexes they track.

Recommendation to find levels on the underlying indexes and trade leveraged ETFs based on those levels.

Market expected to remain choppy until interest rates decline; trading indexes and leveraged ETFs like SQQQ during downturns.

Long position in SQQQ at 46.40 due to market sell-off; adding to the position as it rose.

Successful trade in SQQQ, reaching a high of 49.20 before exiting; highlighting the inverse relationship with QQQ.

Further explanation of the inverse relationship between SQQQ and QQQ, emphasizing the 3x leverage.

Importance of Underlying Index Levels When Trading Leveraged ETFs

Illustrates the significant drop in TQQQ (-10%) when the market is down over 3.3%.

Addresses the question of whether levels can be drawn on leveraged ETFs like TQQQ or SQQQ; the answer is no, they follow the underlying indexes.

Reiterates the importance of basing trades on the underlying index levels rather than the leveraged ETF's levels.

Example of a trade on SPY based on its bounce from the 390-41 level.

Summary and Conclusion on Leveraged ETF Trading

Summary of TQQQ and SQQQ as derivatives suitable for day trading, tracking the market with 3x leverage.

Caution against long-term holding due to potential loss of value; SQQQ loses value when the market is up.

Market outlook: extremely weak, expecting further sell-offs; pessimistic outlook for the end of the year.

Reasons for the pessimistic market outlook: Federal Reserve's actions and inflation.

Final thoughts: two successful trades (SPXL and SQQQ), anticipation of continued downward market trend.