Don't Buy TQQQ Unless You Are Confident About These 3 Things

U.S. tech stocks have had a long run of success. In the past five years, the tech-heavy Nasdaq-100 index has gained 97%, outperforming the S&P 500 (SNPINDEX: ^GSPC), which is up 72%.

What if you could do even better than that 97% gain? The ProShares UltraPro QQQ (NASDAQ: TQQQ) offers investors a unique way to get bigger exposure to the benchmark tech index. This leveraged ETF intends to deliver 3x the daily performance of the Nasdaq-100. So if the Nasdaq-100 gains 2% today, TQQQ will go up by about 6%.

Since the fund's inception in February 2010, the ProShares UltraPro QQQ has delivered average annual returns (by net asset value) of 39.3%. That's impressive, but it's only one side of the story. Because the ETF uses leverage, it can also deliver big drawdowns. During the first three months of 2026, the fund declined more than 20%.

This fund's volatility and risk make it a poor fit for most long-term investors. You should only buy this Nasdaq ETF if you feel highly confident about these three important things.

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1. You believe tech stocks will keep climbing

Buying the ProShares UltraPro QQQ means making a calculated bet that the tech-heavy Nasdaq-100 is going to keep delivering positive returns. But tech stocks don't always go up.

Until a recent rally, the Nasdaq-100 was having a rough start to 2026 -- it lost 9% between Jan. 1 and March 30. Big tech names like Meta Platforms, Microsoft, Netflix, and Tesla are down by 8%-18% in the past six months.

Data by YCharts

Don't buy TQQQ unless you have a strong sense of conviction that good news is coming for tech stocks -- or unless you're willing to ride out some volatility along the way.

2. You know when to sell

Leveraged ETFs like the ProShares UltraProQQQ are often a better fit for traders who want to take a short-term position in a fund, make money, and then sell at a profit. But this means before you buy a leveraged ETF, you not only need to have a strong level of conviction for when to buy, but you also need a clear plan for when to sell.

Day trading and taking speculative short-term positions in the stock market is not a style of investing in stocks that works well for most people -- at least not for long. Patient long-term investors who use a buy-and-hold strategy are not the best fit for this stock ETF.

3. You can control your emotions

Because this ETF delivers 3x the daily return of the Nasdaq-100, it can deliver some gut-wrenching declines. During the past five years, the ProShares UltraProQQQ has gone through several peak-to-trough drawdowns of more than 50%, including most recently between Feb. 14 and April 4, 2025, when the fund lost 54%.

Can you stomach such massive declines? Many investors might be tempted to sell in a panic or hold on too long and watch the ETF decline again during a new bout of volatility.

Leveraged ETFs aren't for everyone. What goes up can also go down, and leverage makes gains more exciting but the losses more painful. The ProShares UltraPro QQQ has a track record of strong growth, but if tech stocks go into a prolonged downturn, it could be a losing bet for investors.

Ben Gran has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms, Microsoft, Netflix, and Tesla. The Motley Fool has a disclosure policy.