Why $ProShares UltraPro QQQ(TQQQ)$  Doesn’t Perfectly Track $Invesco QQQ(QQQ)$  

TQQQ, a 3x leveraged ETF designed to amplify the daily returns of the Nasdaq-100 (tracked by QQQ), often diverges from its benchmark over time. Here’s why:

Daily Resets, Not Long-Term Multipliers

TQQQ rebalances its leverage every day to maintain 3x exposure. If QQQ swings up and down sharply over days or weeks, the compounding effect works against TQQQ. For example, a drop followed by a rebound in QQQ may leave TQQQ worse off than a simple 3x return over the period.

Volatility Drains Returns

Frequent market ups and downs create “volatility decay.” Even if QQQ ends flat over a month, TQQQ could lose value because daily leverage magnifies losses more than gains in choppy markets.

Fees and Costs Add Up

Leveraged ETFs like TQQQ have higher expenses (management fees, borrowing costs) that erode returns over time, especially during stagnant or sideways markets.

Downturns Hurt More

In sustained market declines, TQQQ’s daily 3x leverage accelerates losses. For instance, if QQQ falls for three straight days, TQQQ’s losses compound daily, leading to deeper underperformance.

Bottom Line

TQQQ is built for short-term trading , not long-term holding. Its structure inherently causes divergence from QQQ over time. Investors should understand these mechanics before using leveraged ETFs.