2x Leverage ETF Strategy (14% Annual Returns)

ByOddmund Groette Trading strategies

Today, we look at a 2x leverage ETF strategy. The aim of the strategy is to mitigate the risk of owning a 2x leverage ETF strategy.

This strategy exploits the negative correlation between broad equity indexes (SSO) and long-term treasury bonds (TLT) to mitigate extreme drawdowns while retaining substantial leverage.

The strategy in this article is just one example of an idea. You can use other ETFs, as well. We’ll publish other related strategies later.

2x Leverage ETF Strategy

We backtested with monthly rebalancing:

A line chart displays long-term portfolio equity growth for a leveraged strategy.
Discover how a 2x Leverage ETF Strategy (14% Annual Returns) drives steady portfolio gains.

Strategy Type: Long-term speculation.

Market: SSO and TLT.

Performance

  • No. of trades: 400
  • Average gain per trade: 1.2%
  • Win ratio: 57%
  • Profit factor: 1
  • Annual returns (CAGR): 13.9%
  • Exposure/time in the market: 100%
  • Risk-adjusted return: 13.9% (CAGR divided by time spent in the market (1))
  • Max drawdown: -37%

Trading Rules

We used the following trading rules:

🔒 These trading rules are for members only.

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I’ve got an Msc from Heriot-Watt University, Edinburgh (1996), in addition a to a business administration degree the Norwegian School of Management (BI – 1994). Did my mandatory military service in between.

After university, I worked two years as an auditor (1996-1998).

I co-founded Aksjeforum.com in 1998/99 - one of the first websites about trading and investing in Norway. It was later acquired by Digi.no in 2001.

I have written 4 books about trading (in Norwegian). One of them has sold 30,000 copies, a record for a financial book in Norway.

From 2001 until 2018 full-time independent prop trader (Series 7 in 2001) and investor.

2018-today: Investor, writer, analyst.

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