Frequently asked questions
Which Broker do you recommend?
Interactive Brokers generally charges the lowest commissions on stock trades. Their platform is easy to use and they offer Registered Retirement accounts for both US and Canadian clients. Banks are generally the most expensive and reduce your profitability. www.interactivebrokers.com
Should I trade using $USD (US dollars) or $CAD (Canadian Dollars)?
In order to trade the preferred 3x leveraged stocks – SPXL and TQQQ you would need to transfer your funds into $USD. Canadian ETFs HSU.to and HQU.to can be purchased in $CAD but carry less pop at 2 x leverage. The system results are based on using SPXL and TQQQ.
How do leveraged ETFs such as TTTQ, SPXL, HSU and HQU work?
Direxion Shares are designed to seek daily investment results, before fees and expenses, of 300% or 200% of the performance (or 300%, 200% or 100% of the inverse of the performance, in the case of a bear fund), of the benchmark index that they track. Daily market fluctuations cause net asset levels to rise or fall, which results in portfolio adjustments to help ensure that exposure levels for the following day are set at the correct multiple. Direxion rebalances exposure daily by buying or selling swaps to ensure that each fund tracks as closely as possible to 300% or 200% (or 300%, 200% or 100% of the inverse in the case of a bear fund) of the benchmark’s daily performance.
Investors that want to bet on the long-term gains or losses of a particular asset class or industry sector should probably not be using daily leveraged and short ETFs.
Are there Tax Considerations with using ETF’s?
If investing within a Registered Retirement account there should be little concern. Direxion, the creators of TTTQ and SPXL offer this explanation for those who choose to trade on taxable accounts:
Dynamic asset allocators and traders are appropriate users of leveraged index ETFs as they do not have the same sensitivity to distributions as long-term investors. Traders generally do not seek to delay recognition of gains (or deferral or taxes) and, as a consequence, generate short-term capital gains, which are taxed as ordinary income. As a consequence, a trader will be negatively impacted from a tax perspective by a distribution only if the distribution exceeds the amount of the trader’s short-term capital gains in the current calendar year. Long-term investors are not appropriate users of leveraged index ETFs.
Why do you trade so few ETF's or stocks?
As concluded by professors at Mason school of Business in Virgina information overload from too many sources is a major reason of underperfomance for non-professional investors. They recommend that information needs to be sufficient without being overwhelming, and be easy to use in order to actually be utilized. We strongly believe this to be true and as such have built a system that is complex 'under the hood' but distilled and delivered in a simple easy to use fashion for anyone to use.
Why is there a debate about Market Timing?
Every bank and most Investment advisors will tell you that market Timing does not work..why is that? The main reason is that they have a vested interest to keep you invested in GIC's and Mutual Funds. Imagine for a second if the majority of investors instead of a small minority pulled their money out of Mutual Funds and began timing the market - frankly it would be so disruptive that market timing would no longer work. So let us be glad that most don't practise it; that's the reason why it works, and that is also why we limit membership.
What are the differences between Clearpath Relaxed model and Clearpath Agile?
The RELAXED model aims to remain invested as much as possible. It looks to capture gains over a longer multi-week horizon. Once overbought situations are identified profits are captured; it then waits for the next safer entry point to go back long. Though geared toward outperformance, this model's main attribute is to steer investors toward safety. The goal is actually to post a profit in recessions.