Could anybody tell me what x2 leverage shares do?
There is a full FAQ about this.
I read this but I do not have proper understanding and it doesn’t answer some of my questions. Hence, can T212 create a video as well as text explaining in simple terms with everyday examples how this works.
Well, I guess you are actually buying 2x times more than you are paying.
If you buy a 2X stock for 50$, you would actually own 100$ of that stock.
You will gain or lose your postion 2 times faster.
This should clear some things up: https://www.youtube.com/watch?v=G41-CwY35qk
These products follow the move of the underlying stock and multiply them by the given leverage factor. So if Facebook is up 2% for the day, the Leverage Shares 2x Facebook is expected to go up 4% (and vice versa).
The next day, the process is repeated. If FB were to increase by 1%, then the 2x product is expected to move up 2%.
Ooooo… careful… not entirely true if you’ve held the stock over both Days (ie. didn’t sell) … But if you traded in and out same day then, yes,
True! As mentioned, it is daily leverage - meaning that over longer holding periods (more than 1 day), the performance may not be as expected. Trending markets could work in the investor’s favor while volatile markets could lead to worse performance.
As the saying goes, “the trend is your friend.”
Thanks for the explanation. I was struggling to see how these could work mathematically over even a few days. If the main stock drops 20% it needs to go up 25% to recover. If a 3x investment goes down 60% it needs to go up 150% to recover which is obviously a lot more than 3x25%. So over time they have to get out of step but if you rebase the 3x against the normal stock at the start of each day and only aim for 3x at the end of each day it makes sense.