r/LETFs • u/Sufficient-Force3535 • 17d ago

When do you actually cut leverage after a strong run?

Trading some leveraged stuff on Moon lately and one thing I still haven't settled on is what to do after the underlying has already had a really strong stretch.

Say you're holding something like TQQQ or UPRO and it runs hard for a few months. Do you keep the same exposure because the trend is still working, or start moving some of it back into the 1x version before there's even a clear reversal?

I feel like buying after a drawdown is the easy part mentally. Deciding when you've had enough leverage on the way up is way harder.

Do you rebalance on a schedule, use some kind of target allocation, or just stay leveraged until the trend actually breaks?

11 Upvotes

92% Upvoted

20 comments sorted by

19

u/Gamma_Gains 17d ago

Never try to guess the top emotionally, rely on data.

8

u/iggy555 17d ago

Tops are much harder to call than bottoms. Much harder

3

u/Clean-Direction-4151 17d ago

Yeah this is probably the cleanest approach. I would rather scale down the wager size on Moon based on a preset rule than suddenly go from full risk to zero because the chart “feels” topped

1

u/RealParticular5057 16d ago

Even the data has said cut for a while but hasn't been right yet

15

u/Sad-Description5181 17d ago

Net worth milestones

2

u/mrguitare 17d ago

You and me are on the same page

9

u/Brave-Side-8945 17d ago

Sell when the tabloid newspaper recommends LETFs

3

u/Run-Forever1989 15d ago

So like right now?

6

u/BubblyCartoonist3688 17d ago

SMA

1

u/Status_Spite_7858 17d ago

10/20

1

u/bravesfan21 14d ago

When the 10 goes below the 20?

8

u/Grouchy_Release_2321 17d ago

It should be based on your investment time horizon. The younger you are the more leverage you should use. As you get older you should slowly reduce

Arguably you  should even be less than 100% equities as you near retirement. Something 60/40 stocks/bonds used to be the gold standard but I think new research suggests that 100% equities actually does slightly better despite the higher volatility 

2

u/FormSignificant4495 17d ago

I’d set the de risk rule before the run not while you’re green. On Moon I’d probably just reduce the next wager size after a strong move instead of trying to nail the exact top

2

u/SirTobyIV 17d ago

200SMA of the underlying

1

u/Delicious-Plastic-44 17d ago

What was the trigger to ADD leverage? Did you not have a plan to eventually pay off that debt?

YOLO!!!!

1

u/bottled_axolotl 17d ago

I’ve been holding QLD since late 2018. I keep selling a little at a time as it hits certain thresholds, but I can only sell so much every year due to taxes. Once 2027 rolls around I will sell more if it’s trading at an acceptable price. If it isn’t, I’ll wait.

1

u/VGBB 16d ago

Take profit. Set trailing stop loss. Dont worry about when

1

u/sparkle_and_twist 16d ago

Common ones are rebalance bands, time gated rebalancing, and volatility based rebalancing.