BEATING THE MARKET WITH LEVERAGED ETFS IN DCA WITH USE OF MAXIMUM DRAWDOWN AND MOVING AVERAGE

RICHARD MARTINUS

https://doi.org/10.53465/ER.2644-7185.2026.1.1-28

Abstract: Time and compound interest are among the key factors influencing long-term investment success. In growing financial markets, a passive investment strategy based on long-term asset holding without frequent capital reallocation has proven effective. In practice, however, many investors lack sufficient initial capital, leading them to use a regular investment strategy known as dollar-cost averaging (DCA). This strategy allows for the gradual accumulation of an investment position and reduces the investor's sensitivity to short-term price fluctuations. In the article, we present an alternative that extends the DCA strategy. Our work shows that, with sufficient decline, it is appropriate to allocate investment funds to an instrument that tracks the same asset but with embedded financial leverage. In the long term, our Maxdrawdown-Moving average DCA strategy benefits from market declines, and investors do not need to set aside capital to take advantage of them.

Keywords: DCA, leverage, ETF, investing, drawdown

JEL Classification: G11, G12, G14

Fulltext: PDF

Online publication date: 25 March 2026

To cite this article (APA style):

Martinus, R. (2026). Beating the market with leveraged ETFs in DCA with use of maximum drawdown and moving average. Economic Review, 55(1), 1 - 28. https://doi.org/10.53465/ER.2644-7185.2026.1.1-28

Publisher: Bratislava University of Economics and Business

ISSN 2644-7185 (online)

License:

This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.