$Direxion FTSE China Bull 3X(YINN.US)

Seeing some friends still asking, so reposting again.

Many friends have been unclear about what leverage decay is, so here's a simple explanation.

The decay mentioned here doesn't refer to daily management fees or handling charges deducted from holders. Trading fees and commissions are generated during buying/selling - it's the loss caused by market fluctuations returning to initial levels.

For example, the current price of the underlying stock being tracked is $100

Assuming the market moves as follows over four trading days:

Drop 10%→Rise 10%→Drop 10%→Rise 10%

For regular stocks:

100*0.9*1.1*0.9*1.1=98.01

For 3x leveraged ETFs, the gains/losses are magnified threefold:

100*0.7*1.3*0.7*1.3=82.81.

After this volatile period, the underlying stock is barely affected while the 3x leveraged ETF suffers massive decay, making recovery extremely difficult.

For retail investors like us, leveraged ETFs like YINN are beneficial when riding trends.

But during volatile downward periods, they're extremely unfavorable.

$iShares China Large Cap(FXI.US), as YINN's primary tracking benchmark, peaked around 37 and now stands at 32; while YINN peaked around 60 and now hovers near 32 - clearly showing the decay impact during this volatile downtrend.

If helpful, friends please don't hesitate to like~