TQQQ/QQQ rebalancing strategy
Been following this sub and r/TQQQ for a while, and see the most sophisticated folks on the investing subs here. I’ve been playing (so far successfully) with TQQQ and SPXL, both direct and short-term options (I know, but couldn’t help myself) but want to cut that out and get into a more systematic strategy long term.
I know enough I think about the research. 200-day SMA seems to have worked well historically but is getting killed in the taco world we live in. 6 or 9 sig seem to have massive upside but too risky for me.
I decided on a strategy where I’ve initiated 50/50 TQQQ/QQQ and will rebalance to par whenever the spread is 15% between them (underlying as denominator), both up and down. This should capture some of the buy-low-sell-high of 9sig without taking on so much risk, avoid the opportunity losses from abrupt market upswings of 200SMA after signal says sell (buy high sell low), and keep me in the market with all available funds at my disposal. Better than only holding QLD I think given the rebalancing, even if there will be more volatility drag.
Thoughts? Anyone backtested this type of strategy? Please feel free to crucify it with reasoned thought or analysis. I’m relatively new to this. As an aside, I’m implementing the same strategy with SPXL and AVNM, my proxy for VXUS. Same idea but gives me int’l exposure in this part of my port.
EDIT: I’m doing this in my 401k so tax drag isn’t a concern. Also, to reemphasize, the rebalancing strategy is the key to this in my mind over just holding QLD.