Leveraged and inverse exchange-traded funds (ETFs) have gained popularity among active traders looking to amplify their exposure to market movements. These unique financial instruments offer a way to magnify gains or hedge against market downturns, but they also come with increased risks. Understanding how these funds work, their potential applications, and the risks involved is crucial for any investor considering adding them to their portfolio.

Introduction to Leveraged and Inverse ETFs

Leveraged and inverse ETFs differ significantly from traditional ETFs. While standard ETFs track an underlying index or asset, leveraged ETFs seek to multiply the performance of that index, typically by a factor of two or three. Inverse ETFs, on the other hand, are designed to provide the opposite return of their underlying index, effectively allowing traders to profit from a market decline.

For investors in Singapore or elsewhere, finding the right platform to trade these funds is crucial. Working …