UWTI, VelocityShares 3x Long Crude Oil ETN, which is supposed to track crude oil, shows a year over year negative return whether oil skyrockets or not.

I thought it would be good investment with oil seemingly bottoming out. LOL. 'Oil hit rock bottom, I should buy this 3x leverage ETN and cash in on oil rising in the long term, what could go wrong?' LOL.

Looking at the charts, this ETN loses whether oil is gaining or not, why is this so I can avoid it in the future. And what is a better option if I wanted to continue to invest in oil?

Sincerely, Disappointed Investor

  • Have you looked at the Math at what happens on say a 10% loss and 10% gain that don't actually negate if the returns are compounded? Now, magnify this by a factor of 3 and you may see the dangers with this idea. – JB King Oct 5 '15 at 23:21

After looking at both S&P GSCI Crude Oil Index Excess Return (INDEXSP:SPGSCLP) and CS VS 3x LC ETN NYSEARCA: UWTI they seem to track well (using Google Finance).

I'm not seeing where your statement this ETN loses whether oil is gaining or not holds true.

Both have posted a year-over-year loss.

In the past year the Crude Oil index has fallen from a high of 494 on October 6, 2014 to a low of 213 as of today October 5th, 2015. So of course the UWTI will lose as well.

Please also notice that that, as stated in the prospectus for UWTI:

The ETNs are intended to be daily trading tools for sophisticated investors to manage daily trading risks. They are designed t o achieve their stated investment objectives on a daily basis, but their performance over different periods of time can differ significantly fr om their stated daily objectives. The ETNs are riskier than securities that have intermediate or long-term investment objectives, and may not be sui table for investors who plan to hold them for a period other than one day.

You might want to look into investing in an ETF for long term investment goals and objectives.

Oil ETF List


This security looks like it will require patience for it to pay off. The 200 day moving average looks as if it will soon cross over the 20 day moving average. When that happens the security can be said to be in a bull run.


However, this is just speculation... trying to make money via 'buy low, sell high' as I have stated previously, you have about a 25% chance of buying at the low and selling at the high. Better to buy into a fund that pays dividends and reinvest those dividends. Such as:



  • Ok, why the -1? – Jack Swayze Sr Oct 5 '15 at 15:23
  • 1
    Because you have no idea what UWTI is. – base64 Oct 5 '15 at 16:38
  • The security employes a leverage multiple and is intended to be used for very short holding periods. Consequently, you can't apply typical stock analysis techniques. Your answer attempts to speak in general terms about a very special kind of trading instrument, and once you learn what makes the instrument so distinct, you will see it is meaningless to talk about 200 and 20 day moving averages crossing each other. – Chris W. Rea Oct 5 '15 at 18:01
  • @base On the contrary, I have used such similar funds to try to beat the market. Granted, this is the first time that I have seen this particular symbol. But to ignorantly claim that I have no idea what it is only shows a lack of imagination on your part. I have paid my dues. I have tried to buy low and sell high. A person cannot do it consistently enough to be effective at it. It has taken me decades to finally learn that 'buy and hold' of a dividend payingpaying security is the only way to go – Jack Swayze Sr Oct 6 '15 at 3:23
  • You ignored my point: talking about daily moving averages for a geared 3x daily return security such as this is meaningless. The underlying may have a meaningful daily chart. All that stuff about buy and hold etc. is beside the point. I happen to prefer that strategy too but it doesn't make your suggestion about the moving averages correct for this particular security. – Chris W. Rea Oct 7 '15 at 4:03

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.