Leveraged ETFs: Does TQQQ Really Decay? 3x the Nasdaq, Tested
TQQQ turned $10,000 into $3.3 million since 2010. So why do people say leveraged ETFs decay? We tested it on the real fund and on 41 years of the Nasdaq-100.
By Pavel Penev, MScFounder, TradeWize · 10+ years trading the marketsTQQQ is one of the biggest leveraged ETFs, with about $34 billion in it. It aims to give you three times the daily move of the Nasdaq-100. If the index rises 1% today, TQQQ should rise about 3%.
You'll often hear that funds like this "decay" and shouldn't be held for long. But anyone who bought TQQQ in 2010 and held it is sitting on a fortune. So which is it? We checked TQQQ's real record, then tested a 3x fund on every trading day of the Nasdaq-100 since 1985.
The short answer
Yes, it decays, but only in some markets. In a steady rise, 3x daily can beat three times the index. In a choppy market that goes nowhere, it bleeds: in 96% of the flat years we tested, a 3x fund lost money. And in a long crash it can get close to zero. $10,000 at 3x at the March 2000 peak fell to under $5. Today, 26 years on, it's worth about $3,197.
What this article is, and isn't
This is a test with public data, not personal financial advice, and TradeWize has no affiliate links on this page. Prices come from Yahoo Finance, T-bill rates from FRED and fund details from ProShares, checked on 2026-10-18. Every source is linked at the end.
What a leveraged ETF is
A leveraged ETF uses borrowed money and derivatives to multiply an index's move. TQQQ, from ProShares, targets 3x the Nasdaq-100. SQQQ is its mirror, targeting −3x, so it rises when the index falls.
The key word is daily. The fund resets its leverage at the end of every trading day. It promises 3x today's move, not 3x the move over a month or a year. ProShares says it plainly on the fund's page: for any period longer than a day, your return "may be higher or lower than the Daily Target".
It isn't cheap to run. TQQQ's expense ratio is 0.78% after a fee waiver (0.94% before it). On top of that, the fund pays to borrow the extra 2x, roughly at short-term interest rates. You don't see that bill, but it comes out of the return.
What "decay" means
Decay comes from the daily reset. Here's the simplest case. The index rises 10% one day and falls back to where it started the next. That second day is a fall of about 9.1%.
| Start | After day 1 | After day 2 | |
|---|---|---|---|
| Index (1x) | 100 | 110 | 100 |
| 3x daily | 100 | 130 | 94.5 |
Day 1: index +10%, 3x +30%. Day 2: index −9.1%, 3x −27.3%. No fees or borrowing costs.
The index is back at 100. The 3x fund is down 5.5%. Nothing went wrong, and it did exactly what it promised each day. It gained 30% of 100, which is 30. Then it lost 27.3% of 130, which is about 35.5. The fall comes off a bigger number than the rise did.
Now repeat that for a month. Picture 20 days of +3%, −3%, +3%, −3%. The index loses 0.9%. The 3x fund loses 7.8%. The more the market swings without going anywhere, the faster this adds up. That's what traders call volatility decay.
It works the other way too. In a steady climb, each day's gain builds on a bigger base, so 3x daily can end up ahead of three times the index's return. Decay isn't a fee that's always there. It depends on the path.
TQQQ's real record since 2010
TQQQ launched on 9 February 2010. Since its first close, $10,000 in QQQ, the ordinary 1x Nasdaq-100 fund, grew to $187,664. The same $10,000 in TQQQ grew to $3.3 million. That's about 18 times as much, and 41.7% a year against 19.3%.
Month-end values from TQQQ's first close, dividends included. Yahoo Finance, to 2026-10-16. Log scale.
So over this stretch, decay didn't stop it. These 16 years were one of the best runs the Nasdaq has ever had, and mostly a calm one. That's the kind of market 3x daily is built for.
The ride was brutal, though. TQQQ fell 58% in late 2018 and 70% in a month in early 2020. From November 2021 to December 2022 it fell 82%, and it didn't get back above that top until December 2024. Few people actually sit through an 82% fall with their money still in.
SQQQ, the −3x fund, shows the other side. $10,000 put in on the same day is worth $0.04 today. A falling index pays it, but the Nasdaq mostly rose, and decay ate the rest.
Year by year: when TQQQ beat 3x, and when it didn't
| Year | QQQ | 3x QQQ's year | TQQQ | How choppy |
|---|---|---|---|---|
| 2011 | +3.5% | +10.4% | −8.1% | 24% |
| 2012 | +18.1% | +54.3% | +52.3% | 15% |
| 2013 | +36.6% | +109.9% | +139.7% | 12% |
| 2014 | +19.2% | +57.5% | +57.1% | 14% |
| 2015 | +9.4% | +28.3% | +17.2% | 18% |
| 2016 | +7.1% | +21.3% | +11.4% | 16% |
| 2017 | +32.7% | +98.0% | +118.1% | 10% |
| 2018 | −0.1% | −0.4% | −19.8% | 23% |
| 2019 | +39.0% | +116.9% | +133.8% | 16% |
| 2020 | +48.4% | +145.2% | +110.0% | 36% |
| 2021 | +27.4% | +82.3% | +83.0% | 18% |
| 2022 | −32.6% | −97.7% | −79.1% | 32% |
| 2023 | +54.9% | +164.6% | +198.0% | 18% |
| 2024 | +25.6% | +76.7% | +58.3% | 18% |
| 2025 | +20.8% | +62.3% | +34.4% | 24% |
Total returns from Yahoo Finance adjusted closes. How choppy: QQQ's daily swings over the year, as yearly volatility.
TQQQ beat three times QQQ's yearly return in six of 15 years: 2013, 2017, 2019, 2021, 2022 and 2023. Those were mostly strong, steady years. In 2023, QQQ rose 55% and TQQQ rose 198%, well over three times as much.
In choppy years it fell short. In 2018, QQQ ended flat at −0.1%, and TQQQ lost 20%. In 2011, QQQ made 3.5% and TQQQ lost 8%. Even in 2020, a great year for QQQ at +48.4%, the crash in March cost TQQQ: it made +110.0%, not +145.2%.
2022 is the odd one. QQQ fell 33%, and three times that is 98%. TQQQ lost 79%. The daily reset shrinks the position as it falls, so a 3x fund can't lose more than everything. That's one real advantage over borrowing to buy shares: you can't owe money on top.
When the index goes nowhere
The clearest case of decay in TQQQ's own history ran from September 2020 to March 2023. Over those two and a half years QQQ went up, then down, and finished 1.7% lower, close to flat.
$10,000 in each from 2020-09-01 to 2023-03-13. Yahoo Finance adjusted closes, every fifth trading day.
TQQQ more than doubled on the way up, to $20,004. Then it gave all of it back and more. It finished at $5,053, down 49%. Same index, same start and end, and the 3x fund lost about half your money.
Learn it by doing
Reading about it is one thing — it clicks when you do it. Practise this hands-on in a free, interactive lesson (Stage 6: Index Funds, ETFs & Mutual Funds).
Try the free lesson →Testing 3x back to 1985
Sixteen years is one market. To see more of them, we built a 3x daily fund on the Nasdaq-100 back to 1985. Each day it earns three times the index's return, pays interest at the T-bill rate plus 0.5% on the borrowed part, and pays a 0.84% yearly fee.
We checked it against the real thing first. Over TQQQ's life, the simulation made 41.9% a year. TQQQ made 41.7%. So it's a fair stand-in.
Then we looked at every one-year stretch where the index itself moved less than 5% either way. There were 1,100 of them, counting from every trading day. The 3x fund lost money in 96% of them. The typical result was −12.2%, and the worst was −67.5%. That's decay, measured.
The dot-com crash at 3x
TQQQ didn't exist in 2000. If it had, this is what it would have done. The Nasdaq-100 peaked in March 2000 and fell 83% by October 2002. $10,000 in the index fell to $1,704.
$10,000 at 3x fell to $4.83. Then 2008 came. By February 2009 it was worth $2.74.
Nasdaq-100 against a simulated 3x daily fund, month-end. Log scale.
The index got back to $10,000 in 2015, and that $10,000 is worth $71,612 today. The 3x fund has had one of the best bull markets ever since 2009, and it's still only worth $3,197. Once you've lost 99.9%, even tripling your money a few times doesn't get you back.
When you start matters more than anything else. Here's $10,000 put in on the first trading day of different years, and what it's worth now.
| Start | 1x | 2x | 3x |
|---|---|---|---|
| 1990 | $1,478,253 | $4,071,997 | $1,230,215 |
| 1995 | $845,817 | $2,177,144 | $711,060 |
| 1999 | $181,534 | $171,798 | $26,523 |
| 2000 | $88,996 | $48,844 | $4,831 |
| 2003 | $331,982 | $1,751,447 | $3,656,733 |
| 2009 | $265,570 | $1,973,824 | $7,681,052 |
| 2015 | $75,141 | $213,413 | $374,617 |
| 2020 | $34,146 | $57,636 | $67,001 |
| 2022 | $18,184 | $19,883 | $17,514 |
Simulated daily leverage on the Nasdaq-100 with borrowing costs and a fee. Not real fund returns before 2010.
Start in 2009, near a bottom, and 3x turned $10,000 into $7.7 million. Start in 2000, near a top, and it left you with $4,831. Nobody knows in advance which one they're buying into.
How often 3x beat 1x
Picking start years can prove anything. So we checked every holding period, starting from every trading day since 1985.
| Held for | 3x beat 1x | 3x lost money | 1x lost money |
|---|---|---|---|
| 1 year | 64% | 28% | 17% |
| 5 years | 61% | 30% | 12% |
| 10 years | 61% | 33% | 7% |
| 15 years | 38% | 48% | 0% |
| 20 years | 26% | 56% | 0% |
Simulated Nasdaq-100, daily. Overlapping windows, so they're not independent. Most 15- and 20-year windows include 2000-2002.
Over one year, 3x beat the index 64% of the time. Over ten years, 61%. That sounds good, but look at the next column. Held for ten years, 3x still lost money 33% of the time. The index lost money only 7% of the time.
Over 20 years, the index never lost money. The 3x fund lost money in 56% of those windows. That's almost all down to one crash, but one crash is all it takes.
Over the whole 41 years
From 1985 to today, the index grew 300-fold. The 3x fund grew 290-fold. After 41 years, three times the risk paid about the same.
2x did better than both: 978-fold. Leverage helps up to a point, then the decay and the crashes take more than the extra gains. On this index, over this period, that point was around 2x. 3x was past it.
So, does TQQQ decay?
Yes. It's not a myth, and it's not a slow leak that always wins either. In calm, rising markets, 3x daily can beat three times the index, and TQQQ's record since 2010 shows how much. In choppy markets it bleeds: 96% of flat years lost money. In a long crash it can come close to wiping you out, and it may not come back in your lifetime.
What you're really betting on is the path, not just the direction. You need the index to rise, and to rise without too many big swings or one deep crash. Since 2010 it did. From 2000 it didn't.
If you use one anyway
- Know it's a daily product. The 3x applies to each day. Over a week or a year you'll get more or less, sometimes a lot less.
- Expect falls of 70-80%. TQQQ has had several. If you'd sell in a panic at −50%, the fund isn't for you.
- Keep it small. A 3x fund that falls 80% hurts a lot less as 5% of your money than as all of it.
- Don't use it for money you need. Retirement savings and an emergency fund are the wrong place for it.
- Be extra careful with inverse funds. SQQQ turned $10,000 into $0.04 in a rising market.
- Check the costs. Fees near 1% plus borrowing costs come off every year, whatever the market does.
Outside the US
Leveraged ETFs are sold in many countries, often as ETPs or ETNs. In London, for example, the WisdomTree NASDAQ 100 3x Daily Leveraged (ticker QQQ3) has traded since 2012. They reset daily in the same way, so the same decay applies.
In the EU, ordinary investors usually can't buy US-listed ETFs like TQQQ, because they don't publish the key information document EU rules require. Rules on who can buy leveraged products vary by country, and many brokers ask you to pass a knowledge test first.
What this test can't tell you
- Before 2010 these are simulated returns, not a real fund. A real fund pays trading costs and swap spreads that can change, and it might not have survived a 99.9% fall.
- Before March 1999 the index is the Nasdaq-100's price only, without dividends. That makes both 1x and 3x look a little worse before 1999.
- The Nasdaq-100 is one index, and it had an unusually good run after 2009. The same test on another index could look different.
- The holding-period windows overlap, so they aren't independent results. Treat the shares as a guide, not as odds.
- Taxes and the cost of trading in and out aren't included. Fees and rates were checked on 2026-10-18.
Does TQQQ decay over time?
Yes, in choppy or falling markets. Because it resets daily, a 3x fund loses ground whenever the index swings up and down. In our test, 96% of years where the Nasdaq-100 moved less than 5% lost money at 3x. In steady rising markets the effect can work in its favour.
Can you hold TQQQ long term?
You can, but the result depends on the path. Since 2010, $10,000 in TQQQ grew to $3.3 million. A simulated 3x fund started at the March 2000 peak fell to under $5 and is worth about $3,197 today. ProShares says returns over periods longer than a day can differ a lot from 3x.
Can TQQQ go to zero?
It can get very close. A 3x daily fund loses everything if the index falls about 33% in a single day, and that has never happened to the Nasdaq-100. But a long crash can do almost as much damage: our simulated 3x fund lost 99.98% from 2000 to 2009.
Why did TQQQ lose money when QQQ was flat?
Because of the daily reset. From September 2020 to March 2023, QQQ finished 1.7% down and TQQQ finished 49% down. When an index rises and falls back, a 3x fund falls from a higher base than it rose from, so it ends lower.
Is SQQQ a good hedge?
Only for short periods. Since 2010, $10,000 in SQQQ fell to $0.04. It rises when the Nasdaq-100 falls, but it decays in the same way as TQQQ, and the index mostly rose.
Is 2x leverage better than 3x?
On the Nasdaq-100 since 1985, it was. Simulated 2x grew 978-fold, 3x grew 290-fold and the index 300-fold. That's one index over one period, so it isn't a rule, but it shows more leverage doesn't mean more money.