What is volatility loss and why is the wear and tear of multi leverage ETFs higher?? Simply put, volatility loss refers to the fact that after the market oscillates back and forth, the underlying index may eventually return to its original point. However, leveraged ETFs have to recalculate multiple times the rise and fall based on the new net value every day, and the net value will gradually be eroded by the fluctuations. Take TQQQ, which has been gaining a lot of momentum recently, for example, QQ rose 3% on the first day and fell 2.9126% on the second day, bringing the two days back to the starting point. Buy QQ for 1 million dollars, and two days later it's still 1 million dollars. But TQQQ tracks three times the daily rise and fall of QQ. On the first day, QQ rose by 3%, TQQQ rose by about 9%, and on the second day, QQ fell by 2.9126%, TQQQ fell by about 8.7378%. So buying TQQQ for $330000, it rose to $359700 on the first day and fell again on the second day, leaving only about $32827. QQQ has returned to its starting point, and TQQQ has lost about $1730, which is the fluctuation loss. When the market rises unilaterally, TQQQ will be very strong because every day's increase will continue to amplify on higher principal. When the market oscillates back and forth, each drop will also be deducted back from the amplified net asset value. After several repetitions, the underlying index has not moved much, and the net asset value of leveraged ETFs has been partially eroded. So when buying leveraged US stocks such as TQQQ, it is best to believe that the overall market trend is mainly one-sided upward, in order to have the greatest returns. However, if the market trend is mainly volatile, let alone downward, it may be very uncomfortable. It is difficult to describe such leveraged ETFs as "good" or "bad", and it depends more on the user's understanding of the market. If they believe that the current situation is mostly a one-sided rise, then the returns of leveraged ETFs will be better. I remember writing this, and some friends may ask about the difference between leveraged ETFs and contracts. I will write about it later. I didn't actually know about this before. Coincidentally, my neighbor Kange @ tktang88 bought a triple long Bitcoin ETF last year. At that time, his buying price was around $60000, and Bitcoin: native had already reached over $80000, but it was constantly fluctuating, which made it unbearable for him. Later on, it was he who told me about the concept of fluctuation loss that I finally remembered. One of the key points is that his cost (known as the "effective payback line" in professional terms) has risen from over $60000 to over $70000 due to volatility losses. Later, he waited for the market to improve slightly and directly switched to regular stocks, which made him feel more comfortable. @Gate Crypto、 US stocks, Hong Kong stocks, South Korean stocks, gold CFD、 Predicting one-stop trading in the market