etf 3x | BTCC Knowledge

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What are the risks of investing in a 3x ETF?

The primary risks associated with trading derivatives are "market," "counterparty," "liquidity," and "interconnection" risks. Investing in 3x ETFs indirectly exposes investors to all of these risks. Most leveraged ETFs reset to their underlying benchmark index on a daily basis to maintain a fixed leverage ratio.

What are the benefits of investing in a 3x ETF?

An ETF that is leveraged 3x seeks to return three times the return of the index or other benchmark that it tracks. A 3x S&P 500 index ETF, for instance, would return +3% if the S&P rose by 1%. It would also lose 3% if the S&P dropped by 1%.

How do 3X ETFs work?

How Do 3X ETFs Work? 3X ETFs aim to 3X the returns of the asset that the ETF tracks. Returns are amplified 3X, whether negative or positive. For example, a 3X gold ETF would have 3X the volatility of gold. For every 1% movement in gold, the ETF would move 3% (whether to the upside or downside).

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