FAS TNA TZA And FAZ - Useful Leverage Or Portfolio Gambling?

Jun. 07, 2012 12:06 AM ETFAS, FAZ, TNA, TZA
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Contributor Since 2012

Multi-contest winning Forex Trader looking to help the average Joe trader to avoid the traps of over trading and losing your shirt to the spread.

FAS TNA TZA and FAZ - Useful leverage or portfolio gambling? These are 3x leverage portfolio market ETFs that have become the hot pick by many retail traders for their portfolios. They do look enticing with upwards of 5% moves many days in these highly leveraged ETFs. Are these portfolio gambling?

Imo, if you're a younger trader and can find a higher probability setup these ETFs can be a great resource. But if you're an established larger retail account and would like to limit risk these stocks are a huge gamble with unnecessary risk. If your yearly goal is 30% or less in annual returns why would you want to trade a leveraged ETF that moves generally more than 5% in value every day? Additionally the performance in both seem a little off, both FAS and FAZ are down from where they were 3 months ago. Aren't these supposed to be direct inverses of each other? If you're a young day trader go for it, but for swing traders and older traders looking to avoid risk these leveraged ETFs put your account at unnecessary risks.

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