TQQQ and SQQQ Trading Strategy: Outperforming Buy-and-Hold with Cycle Timing
- May 20
- 5 min read
It’s been over 16 years since we called the bear market low back in April of 2009. And now, with the benefit of hindsight, the numbers are staggering. If you had put just $1,000 into the right asset and held on, you could’ve built life-changing wealth.
But that’s the easy story. What makes this more powerful is how cycle timing can beat even the best buy-and-hold outcomes, without needing to predict the next NVIDIA or Netflix.
Let’s look at some of the standout returns since the 2009 low:
$1,000 in NVIDIA = Over $615,000
$1,000 in Netflix = Over $194,000
$1,000 in TQQQ = Over $159,000
While NVIDIA and Netflix made massive gains, they did so with high risk and uncertainty. In 2009, NVIDIA was a niche graphics company. Netflix was still shipping DVDs. Nobody could’ve predicted their exact trajectory.
But TQQQ—designed to track 3x the daily return of the Nasdaq-100—was a broad tech trend play. It didn’t require stock picking. And even more impressively, it could be traded based on cycle timing for even greater gains.
Buy-and-Hold Was Strong—But Trading Cycles Was Smarter
Holding TQQQ over the long term would have turned $1,000 into more than $159,000. That’s incredible by any standard. But here's the real kicker: we didn’t just hold it—we traded it.
Using cycle-based entry and exit signals, we avoided major drawdowns and participated in the most explosive parts of the move. Our system didn’t rely on predicting earnings or analyzing news. It simply tracked:
When momentum turned up
When cycles peaked or rolled over
When crossovers signaled a shift in structure
By stepping in during rising phases and stepping aside when cycles reversed, we didn’t just match buy-and-hold—we outpaced it in terms of risk-adjusted returns.
This is the essence of Steve’s approach: Let the cycle tell you when to be in, and let structure tell you when to step aside.
What Happens When You Hold TQQQ Through a Down Cycle
Leveraged ETFs like TQQQ are built to magnify returns in short bursts, not to weather long consolidations or bear markets. When held through a declining cycle, they don’t just lose ground—they decay faster due to their daily reset structure.
During flat or choppy conditions, the volatility itself becomes a drag. When prices whipsaw up and down, the ETF can drop even if the underlying index ends flat. That’s why holding TQQQ without a timing framework is risky.
The solution? Cycle awareness. By exiting when cycles roll over and re-entering when momentum returns, you avoid the trap of holding through decay. That’s how you stay positioned for gains without bleeding capital in between.
This same timing principle applies across all risk-sensitive moments. In fact, when sentiment shifts suddenly—such as after a government downgrade or macro shock—the market doesn’t crash because of the news, it accelerates because the pressure was already in place. That’s the core of cycle-based trading.
Check our post on How the US Credit Rating Downgrade Aligns with a Projected Market Top for more info.
Why TQQQ and SQQQ Are Ideal for Cycle-Based Strategies
TQQQ and SQQQ are designed for short-term traders. But when used with cycle timing, they become strategic tools—not gambling chips.
TQQQ gives exposure to bullish phases, amplifying returns during rising intermediate cycles.
SQQQ gives inverse exposure, allowing traders to profit or hedge during declining cycles.
Most traders misuse these tools, holding them too long or trading without structure. But in Steve’s system, TQQQ and SQQQ are simply expressions of trend conviction. When momentum builds and cycles rise, TQQQ becomes the tool of choice. When cycles roll over, SQQQ lets you profit—or simply preserve capital.
You’re not holding for the sake of holding. You’re positioned based on cycle clarity.
How Stops and Crossovers Protect Capital
It’s not just about when to enter—it’s about knowing when to get out. That’s where crossover averages come in. Tools like the 2/3 and 3/5 moving averages aren’t technical gimmicks—they’re boundary lines of structure.
If price breaks below a crossover average and momentum confirms, that’s your signal to reduce exposure. Stops should be placed just below these levels or the nearest swing low. This way, you’re not guessing—you’re exiting based on what the market is telling you.
This structure-based exit system keeps losses small and manageable. It ensures you’re not caught in major drawdowns and are always aligned with the trend direction.
People Also Ask About TQQQ and SQQQ Trading Strategy
Is TQQQ good for long-term investing?
Not typically. TQQQ is a leveraged ETF, and its compounding behavior can hurt performance during sideways or volatile markets. But when used with cycle timing, traders can capture the most powerful phases while avoiding erosion. That makes it a strategic asset—not a buy-and-hold instrument.
What is the best strategy for trading TQQQ and SQQQ?
The most effective strategy is one rooted in cycle analysis and price structure. Steve’s method uses crossover levels, price channels, and momentum turns—not lagging indicators—to define entry and exit points with discipline and clarity.
How do I know when to switch from TQQQ to SQQQ?
Cycle traders monitor projected turns. When the intermediate cycle is topping and price breaks below key crossover levels, it’s a sign to reduce TQQQ exposure. If cycles begin to decline, SQQQ becomes the next trade—not because of emotion, but because structure confirms the transition.
Can trading TQQQ outperform picking stocks like NVIDIA?
Yes—and with far less speculation. While NVIDIA’s returns were incredible, they came with high uncertainty. Trading TQQQ with cycle awareness means capturing broad tech momentum without needing to guess which company will dominate. It’s exposure without the pressure to predict.
Why not just hold TQQQ through all cycles?
Because drawdowns in leveraged ETFs can be brutal. The decay is real—and it accelerates in choppy or bearish phases. Steve’s strategy preserves capital by stepping aside during those times and redeploying it when momentum returns. That’s how long-term growth becomes sustainable.
Resolution to the Problem
Most traders either hold blindly or guess their way through market turns. They hope to find the next big stock or time their entries based on emotion.
Steve’s system is different. By trading ETFs like TQQQ and SQQQ with cycle clarity, traders don’t need to predict—they just need to align with the structure.
Cycle tools provide the map. Crossovers confirm structure. And stops protect capital.
You’re no longer reacting—you’re trading with rhythm.
Join Market Turning Points
Ready to stop chasing stocks and start trading the trend?
Market Turning Points gives you:
Cycle projection charts updated in real time
Crossover average signals to anchor your trades
Long/short ETF signals across every cycle phase
Conclusion
You don’t need to predict the next NVIDIA to win big.
With a cycle-based TQQQ and SQQQ trading strategy, you follow the rhythm of the market—rising with momentum, stepping aside when cycles shift.
That’s how traders outperform buy-and-hold. Not by getting lucky. By getting in sync.
Author, Steve Swanson
