Drawdown Dip Buyer + 8% Target on TQQQ

ProShares UltraPro QQQ: 3x daily leveraged Nasdaq-100, with large trends and deep drawdowns. Backtest 2021-01-04 to 2026-10-02, $10,000 starting capital, computed by the same engine that runs live DeployQuant strategies.

The drawdown dip buyer on TQQQ won all 9 of the trades it closed and still returned 11.91% a year, less than half of buy-and-hold's 25.35%. From 2021-01-04 to 2026-10-02 it turned $10,000 into $19,075, against $36,585 for holding. The maximum drawdown was 79.56% against 80.77%, and the Sharpe was 0.49 against 0.69. This is the clearest example in the data of a 100% win rate that says little about the outcome.

The rule buys when the fund is more than 10% below its 20-day high and sets a limit order 8% above the entry. It has no stop. Every one of the 9 closed trades hit the 8% target, between 7.99% and 8.02%, so the closed trades add up to a modest gain. The return and the risk come from how long each position took to reach the target, and from the position that was still open at the end of the window.

The longest trade lasted 1,094 days, from 2021-12-08 to 2024-12-06, to earn 8.01%. During that hold the account sat through the full 2022 decline. Exposure was 87%, so the template was invested nearly all the time even though it looks like a rule that waits for a dip.

All figures are from one window, with no fees or slippage in the headline run, $10,000 starting cash, no margin and daily decisions. Trade prices are adjusted for splits and dividends. The rule ranks 9th of 12 on TQQQ, and TQQQ is 9th of 59 funds for this rule.

Year by year

Holding returned 88.9% in 2021, −78.1% in 2022, 187.6% in 2023, 57.1% in 2024, 33.9% in 2025 and 54.1% in 2026 so far. The dip buyer returned 34.4%, −77.3%, 178.9%, 56.8%, 17% and 22.2%. In 2022 it was ahead by 0.8 points, in 2024 behind by 0.3 and in 2023 behind by 8.7. The large gaps are 2021, at −54.5 points, 2025 at −16.9 and 2026 at −31.9.

The 2022 and 2023 figures are close to holding because the template was holding. It bought on 2021-12-08 at an adjusted 39.71, and that position stayed open through 2022 and 2023 and most of 2024, so the account took the full decline and the full recovery. The 8% target came on 2024-12-06 at 42.89. In effect the template bought a dip in December 2021 and spent three years waiting to be 8% better off.

In 2021 the template made 4 closed trades, all at 8%: 2021-02-02 to 2021-02-09 in 7 days, 2021-02-10 to 2021-06-24 in 134 days, 2021-09-21 to 2021-10-25 in 34 days and 2021-12-02 to 2021-12-07 in 5 days. The 88.9% for holding came from staying in the fund, and the template was out for the gaps between those trades, which is why it trailed by 54.5 points.

In 2025 and 2026 the rule had closed trades again: 2024-12-09 to 2025-08-11 at 8% over 245 days, 2025-10-13 to 2025-10-24 in 11 days, 2025-10-27 to 2026-04-24 over 179 days and 2026-06-08 to 2026-06-15 in 7 days. Each was a modest gain on a fund that returned 33.9% in 2025 and 54.1% in 2026 so far. A position held for 245 days to make 8% is invested and earning, but the fund's own return over those months was larger.

Month by month

The monthly table has more positive and negative extremes than the trade list suggests, because the template held a position through the month in most cases. The best month was April 2026 at 46.98% and the worst April 2022 at −36.13%. Holding's best and worst were April 2026 at 51.68% and April 2022 at −36.68%, so the template's monthly path is close to the fund's in the months it was invested.

The losing months cluster in 2022 and early 2025: January 2022 at −24.92%, June 2022 at −26.07%, September 2022 at −28.61%, December 2022 at −24.53% and March 2025 at −22.74%. The winning months came with the recoveries: November 2023 at 31.97%, January 2023 at 29.44%, March 2023 at 26.34%, July 2022 at 36.49% and May 2025 at 26.75%.

Months at 0% are rare here. The template sat in cash in the stretches between trades, for instance in 2021 from July to August and November, in September 2025, and in May 2026. Outside those, it was fully invested. With 87% exposure the monthly record looks like holding with a few gaps.

Every trade

dip buyer on TQQQ made 9 closed round trips and one position still open at the end of the test, an average hold of 191 days, an average winner of 8.00%. It held a position at the close on 87.0% of trading days.

Prices are adjusted for splits and dividends, so they sit below the quotes printed at the time. An open position is marked at the last close.

There were 10 trades in total, 9 closed and 1 open. The shortest closed trades were 5 days from 2021-12-02 and 7 days twice, from 2021-02-02 and 2026-06-08. The longest were 1,094 days, 245 days and 179 days. The median hold was 34 days and the average was 190.7 days, a gap that shows how much a few long trades dominate the averages. Every return was within a few hundredths of 8%.

The most important trade is the one open at the end. The template bought on 2026-06-16 at 83.79 after selling a position on 2026-06-15, and that entry was down 3.32% on 2026-10-02. It is the first trade in the list that has not hit the target. Under the rule it stays open until price reaches 8% above the entry.

The trades also show how rarely the rule's dip condition actually fires when the account is flat. The fund had 56 falls of 10% or more from a 20-day high, covering 478 days, yet the template made only 10 entries, because each position was held for weeks or years and the condition was checked only while flat. Entries came in clusters: 2021-02-02 and 2021-02-10, 2021-12-02 and 2021-12-08, 2024-12-09, 2025-10-13 and 2025-10-27, and 2026-06-08 and 2026-06-16. In the December 2021 cluster the first entry made 8% in 5 days and the second, one session later after the sale, took 1,094 days.

Largest drawdowns

Buy-and-hold's deepest drawdown ran from 2021-11-19 to 2022-12-28 and reached −80.8%.

The largest drawdown was 79.56%, from 2021-12-27 to 2022-12-28, with recovery on 2024-07-10. That is 366 days from peak to trough and 560 days to recover. Holding's was 80.77% from 2021-11-19 to 2022-12-28, recovered 2024-12-04. The template's drawdown was shallower by 1.21 points and recovered earlier, on 2024-07-10 against 2024-12-04. The second, 56.85% from 2024-12-16 to 2025-04-08 recovered on 2025-08-11, was close to holding's 57.4%. The third was 36.59% from 2024-07-10 to 2024-08-07, recovered 2024-12-04.

A dip buyer without a stop takes the full fall on whatever it holds. The data show that directly: the maximum drawdown of 79.56% is within about a point of the fund's own, with a win rate of 100%. The strategy's own caveat says that if the dip keeps falling the position rides it down until the target is reached. On TQQQ in 2022 it did.

The open trade from 2026-06-16 is the live example of that exposure. It was entered at 83.79, above the 82.98 at which the previous position was sold a day earlier, and it was down 3.32% when the data ended. The rule has no limit on how far it can fall before the 8% target is reached.

With trading costs

The headline run fills at the bar price. These runs charge slippage on every fill.

At 5 and 10 basis points the CAGR was 11.89% in both runs, against 11.91% with no costs. The drawdown moved from 79.56% to 79.61% and the ending value from $19,075 to $19,065 and $19,064. The Sharpe was 0.492 against 0.49. Costs barely matter because the template made 19 fills in 5.7 years. For a rule with this few trades the headline result and the cost runs are close to the same number. The RSI(2) snapback on TQQQ is the rule to compare for a template that trades far more often.

TQQQ's liquidity is not a constraint. Average daily dollar volume was $4,150,045,180 and median minute volume was 285,786.5 shares, so fills of the size tested sit well inside the market.

Changing the parameters

The four variants change the drawdown trigger or the target. A trigger of −7% with the 8% target returned 13.32% over 10 trades, all wins, and a 79.64% drawdown. A trigger of −15% returned 21.4% over 15 trades with a 79.71% drawdown, the highest of the five versions. A 6% target with the −10% trigger returned 13.71% over 13 trades, and a 10% target returned 15.72% over 9 trades.

The drawdown stays between 79.56% and 79.71% in every version. The stop-less structure fixes the drawdown, and the parameters only change how many trades the template completes. The −15% trigger made the most trades and returned the most. A deeper trigger enters later.

All five versions won every closed trade, so the win rate carries no information about which setting is better. The 15% result comes from entries made at different dates, and a different window would give a different table. A trigger picked from this table is fitted to this window. The related rule on the same fund, RSI mean reversion, returned 12.08%, close to this one.

How TQQQ behaved

TQQQ's own record sets the scale. Annualized volatility was 67.11%, the maximum drawdown 81.68% from 2021-11-19 to 2022-12-28, and the calendar years ran from −79.07% in 2022 to 198.32% in 2023. The fund gave three times the daily move of QQQ: a total return of 291.92% against 151.07% for the underlying, with a simple 3x of 453.22% and a daily rebalanced ideal of 568.66%.

The fund was above its 200-day average on 69.48% of sessions and crossed it 28 times. A drawdown of 10% from a 20-day high is routine here: it happened 56 times, covering 478 days. A fund with an average daily range of 4.74% meets a 10% drawdown condition often, which is why the trigger fires so often. After 18 sessions with RSI(14) below 30, the median forward 20-day move was 6.9%, against a baseline of 3.62%, which supports buying weakness in the fund but says nothing about how deep the weakness gets.

Among leveraged funds, the dip buyer did best on TECL at 24.71% and FAS at 24.15%. ROM returned 19.87% and QLD 18.58%. SPUU returned 14.17% with a 41.32% drawdown and SSO 12.96% with 41.64%, shallower than TQQQ's 79.56%. On UST and TMF it never closed a trade and returned −5.12% and −29.84%. The median across all 59 funds was 1.33% and across the leveraged category 16.42%, so TQQQ at 11.91% is below the category median.

What the dip signals did on TQQQ and how other leveraged funds compare

The fund's own statistics say the dip signal itself was sound. After the 14-day RSI fell below 30, which happened on 18 sessions, the median 5-day forward return was 10.3% and the median 20-day return was 6.9%. The baseline median across all sessions was 1.24% over 5 days and 3.62% over 20. Oversold readings on TQQQ were followed by rebounds well above normal, and the 8% target sits inside the size of those rebounds. The weakness of this template on TQQQ comes from what it does between the entry and the exit. A position that is entered into a dip and then watches the dip continue has no way out until the fund climbs back 8%.

The same fund shows what a different exit does with the same kind of signal. On TQQQ the RSI(2) snapback returned 39.31% a year with a 43.2% maximum drawdown, and the weekly 7% target returned 29.44% with a 49.66% drawdown. Neither is a stop-less hold. The dip buyer, at 11.91% and 79.56%, sits ninth of twelve. The 200-day regime filter returned 24.95% with a 36.54% drawdown, so a rule that stepped aside in 2022 finished well ahead of this one on both measures.

Most of TQQQ's return arrived overnight. The overnight share of the log return was 74.87% and the intraday share 25.13%, with an average overnight gap of 1.78%. The dip buyer buys at the next open after the signal, so it takes the gap that follows a weak close. Between 2025-04-03 and 2025-04-04 the fund fell 16.04% and then 18.3% in two sessions, and the best day of the window, 35.25% on 2025-04-09, came right after. The template's second-deepest drawdown, 56.85%, ran from 2024-12-16 to the low on 2025-04-08, and it recovered on 2025-08-11 when the position from 2024-12-09 closed at its target. A position that is open going into a stretch like that rides both the fall and the rebound.

The month-of-year averages are large because the fund is volatile. May averaged 14.75% and November 12.06%, and September averaged negative 5.42% and February negative 3.82%. With five or six observations of each month, one extreme year dominates each average. The day-of-week averages were small, with Monday at 0.53% the highest, and the lag-1 autocorrelation was negative 0.04.

Other leveraged funds show how much the fund matters for this rule. The TECL run returned 24.71% with 18 trades and a 76.28% drawdown, and FAS returned 24.15% over 18 trades with 65.26%. SOXL returned 16.42% and its drawdown reached 88.53%, the deepest in the group. At the slower end, SPUU returned 14.17% with a 41.32% drawdown over 10 trades. The median across the leveraged group was 16.42%, so TQQQ at 11.91% was below the middle. TQQQ completed 9 trades, and one of them, held for 1,094 days, accounts for much of the time the account was exposed.

The rules

Wait for a 10% drawdown from the 20-day high, buy it, and take profit at +8%.

A rule-based buy-the-dip. The entry is a measured 10% drawdown inside the trailing 20 sessions, and the exit is a resting +8% limit order. Between signals the sleeve sits in cash, so the template can wait months for an entry.

Good for: assets that sell off hard and recover; it trades volatility without chasing strength.
Watch out: no stop-loss: if the dip keeps falling, the position rides it down until the +8% target is reached or the strategy is stopped. Trade counts are low, so single trades dominate results.

The rule has three parts: a measured drawdown, an entry at the next open and a resting limit order. The drawdown is measured against the highest price in the last 20 sessions. Because TQQQ moves about 4.74% in an average day, that 10% condition is met after a few bad days, and the template buys early in a decline, not at the low.

The exit is where the structure shows. A limit at entry times 1.08 fills only if price returns to that level. When a position is entered at 39.71 and the fund falls to an adjusted price near 8.79, as TQQQ did in December 2022, the limit stays at 42.89 and waits. The position held in that time lost value on paper and the account's drawdown followed the fund down. The template made 8% on the trade, and the 79.56% drawdown happened in between.

The pattern differs from the trend and trailing stop version on the same fund, which returned 25.03% with a 43.94% drawdown. That template exits on a stop and so limits the fall, at the cost of many more trades. The dip buyer is the reverse: 9 wins from 9 closed trades and no protection. Other comparisons on TQQQ include the 200-day regime filter and the weekly 7% target.

Related

Backtests are hypothetical, computed by DeployQuant's engine on minute-resolution consolidated US market data (2021-01-04 to 2026-10-02, $10,000 starting capital, no margin, no fees or slippage in the headline run; buy-and-hold puts 98% of the account in at the first open, as the templates do) and do not guarantee future results. Nothing on this page is investment advice. Live trading involves risk of loss.