Leveraged ETFs —Lever Without Loans
Unlike other forms of leveraged trading accounts, with leveraged ETFs, you don’t need to borrow money. Instead, these ETFs have “implicit leverage.”

SSO, for example, is 2x the S&P 500 and automatically gives you 2x leverage. This type of leverage is also cheaper than borrowing money or having a margin account with your broker.

People who are against leveraged ETFs also highlight the “volatility decay” as a backdrop for leveraged ETFs.

Volatility decay is simply the principle that whenever the price of an investment drops, it takes more effort to come back to the same level. In other words, lots of ups and downs (volatility) will ‘decay’ the price.

Drawdown is often used to measure an investment's risk. It measures the peak-to-bottom decline of an investment.

Drawdowns might be scary, and they are the main reason why most people stay away from leveraged ETFs. Stomaching a 60% decline in the value of your investment might be psychologically hard.

Remember, you only lose if you press the sell button.

Remember: There’s no such thing as great returns with little volatility.

Drawdowns are steep and painful to see, but there is no such thing as a low-volatility, high-return investment in the market.

Drawdown periods or whenever the market crashes should be seen as a discount opportunity — a time to buy cheap — rather than a time to panic.

Still, to make this strategy work, you should only invest money that you don’t foresee needing over the next coming years.

The best way to benefit from the drawdowns is to continue investing through these times.

Leveraged ETFs should only be used if you don’t need the money for the next 10 years.

There is a wide range of leveraged ETFs to choose from, but you need to be very careful when choosing the right one.

Sector ETFs should be avoided because sectors are very often seasonal, unpredictable in the long term, and are more volatile than broad market ETFs.

Commodities ETFs should also be avoided

Here are the leveraged ETFs that, according to the data, would be eligible for long-term investing. They are all index ETFs that track the biggest stock market indexes — the S&P 500 and Nasdaq-100:

SSO — ProShares Ultra S&P 500 (2x the S&P 500).
UPRO — ProShares UltraPro S&P500 (3x the S&P500).
QLD — ProShares Ultra QQQ (2x the Nasdaq-100).
TQQQ — ProShares UltraPro QQQ (3x the Nasdaq-100).
TMF — Direxion Daily 20+ Year Treasury Bull (3x treasury bills).