Jake, CFDs are expensive, but these are no free lunch!
The problem with the 2 and 3 times instruments is that because the percentage change is calculated and reset on a daily basis with high volatility but no real change can be expensive. Because of the maths the 3x ETF will waste value with market volatility.
Example underlying falls then rises
Underlying security
Day 1: open 100 -10% = close 90, Day 2: open 90 – 11.1111% = close 80 Day 3: open 80 + 25% = close 100
Instrument 3X
Day 1: 100 – 10% * 3 is 30%= close 70, Day 2: open 70 – 11.1111% *3 is -33.3333% = 46.667, close 46.667 Day 3: open 46.667 + 25% * 3 is 75% and 175% of 31.11 is only 81.667, close 81.667
Example underlying rises then falls
Underlying security
Day 1: open 100 + 25% close 125, Day 2: open 125 – 20% close 100
Instrument 3X
Day 1: open 100 + 25% * 3 is 75% = 175, close 175 Day 2: open 175 – 20% * 3 is - 60% = 70, close 70.
Of course the above is an extreme example, but on something like Gamestop a 3x ETF would soon be worthless.
If any one disagrees with the above please show where I went wrong.