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“Use of TQQQ allows day traders to fully exploit the benefit of the Opening Range Breakout (ORB) Day Trading Strategy.“

The Pair Trade investment trading strategy is used in this Machine Learning use case. Also known as Pairs Trade, two highly correlated securities are selected, matching a long position with a short position. It is a market neutral strategy, enabling traders to profit in all market conditions.

Two highly correlated ETFs are used:

1. TQQQ: ProShares UltraPro QQQ (the long position) seeks daily investment results that correspond to three times (3x) the daily performance of the Nasdaq-100 Index.
2. SQQQ: ProShares UltraPro Short QQQ (the short position) seeks daily investment results that correspond to three times the inverse (-3x) of the daily performance of the Nasdaq-100 Index.

“The resulting portfolio would have earned an outstanding return of 1,484% during the same period of 2016 to 2023, while an investment in the QQQ ETF would have earned 169% annualized.”

Since machine learning algorithms are unconstrained, the two highly correlated securities (TQQQ, SQQQ) are enhanced with three (3) additional correlated ETFs:

1. QQQ: Invesco QQQ is an exchange-traded fund that tracks the Nasdaq-100 Index. The Index includes the 100 largest non-financial companies listed on the Nasdaq based on market cap.
2. QLD: ProShares Ultra QQQ seeks daily investment results that correspond to two times (2x) the daily performance of the Nasdaq-100 Index.
3. QID: ProShares UltraShort QQQ seeks daily investment results that correspond to two times the inverse (-2x) of the daily performance of the Nasdaq-100 Index.

“Most day traders flop. These researchers say one popular strategy generated 46% per-year returns.“