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I keep seeing these 3x ETFs. They seem to go way up or down each day. I bet that means you can make lots of money one them. Are they dangerous?

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3X ETFs basically take a commodity like oil or gold and mimic their movements, but 3x as much so. So if oil is up 1% today, then the 3x ETF (UWTI) will be up roughly 3%. There are also inverse 3x ETFs, meaning they do the opposite of what the commodity does, but 3x. So if oil is up 1%, then the inverse 3x ETF will go down roughly 3%.

I say roughly because they are known to suffer what is called decay, meaning that over time, most 3x ETFs lose a small amount of value in the trading process and eventually (theoretically) will get to 0.

These ETFs are dangerous, especially for beginners because they are susceptible to huge swings and can bring about major losses. If you are planning on getting involved in these set close stop losses and never hold.

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