I bought a 2x Nvidia ETF last year. what daily compounding actually did to me
I think its worth sharing because i see people being excited about leveraged etfs constantly and its better if u see a real number.
I invested €3,200 into a 2x leveraged nvidia ETF in q3 last year and nvidia itself is up roughly 18% since then so my etf position is down 23% because of something called daily compounding that I understood intellectually and completely failed to account for emotionally.
they reset every single day, if the stock goes up 5% and then down 5% on consecutive days, you havent broken even ,you are slightly down and the leverage amplifies that gap on every cycle. Now in a trending market they work beautifully but in a volatile sideways market which is most of what markets do most of the time, they destroy value while the underlying asset goes nowhere.
Morningstar flagged this week that over 1100 etfs launched in 2026, nearly a third classified as trading tools and there are now 600 of these available. The fund companies are not confused about what they are selling and the prospectuses are accurate. Retail buyers just systematically misread 2x exposure as 2x returns rather than 2x daily volatility with asymmetric compounding risk.
I moved what was left into a basic S&P 500 ETF on traderepublic and added a small gold position through bitpanda since metals have quietly outperformed everything else this year anyway.its boring but its working in some way
ok one more key note the more interesting the ETF sounds, the more carefully you should read the prospectus before touching it.