My backtests suggest that periodic rebalancing and band-based rebalancing would have gotten you to similar returns, as long as you don't rebalance so frequently that trading slippage dominates. In the second case, you probably don't need to rebalance QQQ/VOO very often. In the first case, you will often be trimming gains from 3x into 1x (or replenishing 3x), so you would rebalance everything. In the first case, the 3x is there to goose returns in the second case, the 3x may end up as the dominant part of the portfolio and the 1x is the safety. You basically have two choices: (i) maintain initial asset allocation or (ii) treat the 3x leveraged as a separate bin that is independent of the 1x portfolio.Įither approach is fine, but you will end up in very different places.
#Drawdown fund rebalance strategy how to
I think I am going to get a bunch of answers telling me to backtest for #1 but I have trouble understanding or figuring out how to set it up with the scenarios I'd like. Are there times when it makes sense to rebalance on events like what we have this week? I was thinking about rebalancing when one of the security starts to tilt heavily 15-20%.My questions are should I only rebalance the leveraged portion of my portfolio or the entirety of my IRA.My goal is to rebalance quarterly and DCA via backdoor and mega backdoor.
While the rest of my leveraged IRA is 40% TMF, 30% UPRO, and 30% TQQQ a total of 30% of my IRA.
I'm trying to see what strategies can be employed during certain drawdowns.Īt the moment, I have 35% QQQ and 35% VOO in my Roth IRA. I've been playing around with 30% of my Roth IRA with leveraged fund. However, ever since I learned about this adventure. Never sold but it wasn't a big portion of my portfolio. Bit of a backstory, I've had TQQQ in my brokerage since 2016.
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