What Is the Difference Between Core ETF, Long ETF, and Short ETF?
The Core ETF is the benchmark index you track for trend direction (e.g., QQQ, TLT, or FBTC). The Long ETF is what you buy when the trend is bullish (e.g., TQQQ, UBT, or BITU). The Short ETF is what you buy when the trend is bearish (e.g., SQQQ, TBT, or SBIT). The system analyzes the Core ETF and tells you which leveraged ETF to focus on.
1How It Works
- •Core ETF: The non-leveraged or base ETF used to determine market direction. Examples include QQQ (Nasdaq 100), TLT (20+ Year Treasuries), and FBTC (Bitcoin).
- •Long ETF: A leveraged ETF that profits when the Core ETF goes up. For QQQ, this would be TQQQ (3x bullish).
- •Short ETF: A leveraged (inverse) ETF that profits when the Core ETF goes down. For QQQ, this would be SQQQ (3x bearish).
- •The system computes moving averages and other indicators on the Core ETF only.
- •Based on Core ETF signals, it recommends focusing on either the Long or Short ETF.
- •You then buy and manage positions in the appropriate leveraged ETF.
2Example
QQQ / TQQQ / SQQQ Configuration
Setup:
• Core ETF: QQQ (tracks Nasdaq 100)
• Long ETF: TQQQ (3x leveraged, profits when Nasdaq rises)
• Short ETF: SQQQ (3x inverse, profits when Nasdaq falls)
Scenario 1 - Bullish:
QQQ is above both its 21-day and 50-day SMAs.
→ Bias: BULLISH
→ Suggested Action: Consider adding TQQQ positions
Scenario 2 - Bearish:
QQQ is below both moving averages.
→ Bias: BEARISH
→ Suggested Action: Consider adding SQQQ positions
3Common Questions
Why not just trade the Core ETF directly?
You can, but leveraged ETFs amplify returns (and losses). If you have conviction in a trend, leveraged ETFs can magnify gains. This tool helps you time entries and manage risk.
Can I use different leverage levels?
Yes. You can configure 2x leveraged ETFs (like QLD/QID) instead of 3x (TQQQ/SQQQ). The system works with any valid ticker symbols.
What happens during neutral bias?
During neutral bias, the system suggests caution. You may choose to hold existing positions but avoid adding new ones until a clear trend emerges.
Do I trade both Long and Short ETFs at the same time?
Typically no. The system suggests one direction at a time based on the trend. You would focus on either the Long ETF (bullish) or Short ETF (bearish), not both simultaneously.
Technical Notes
- —Indicator calculations (SMA, RSI, ATR, Chandelier Exit) are performed on the Core ETF's daily data.
- —Long and Short ETF prices are fetched for display and stop-loss calculations.
- —Historical data requires approximately 100+ trading days for accurate indicator computation.