Does a 2x Nasdaq ETF double the result of a QQQ strategy?

Not by default. In Alvarez’s test, applying QQQ rules directly to QLD raised the return by about 50% but the drawdown by over 150%; using QQQ signals to trade QLD came close to a doubling.

Alvarez: RSI(2) on QQQ and its 2x ETF QLD

Cesar Alvarez, Alvarez Quant Trading, post of 4 March 2015

AA — the trader’s own published text (rule document, own site) was read.

Mean reversion tested on a Nasdaq-100 ETF and its leveraged twin. A deliberately simple RSI(2) rule used to answer one question: how should a strategy be built for a leveraged ETF? His answer is not “double the return”: develop on the leveraged fund itself, or trade it with the base ETF’s signals, and do not copy rules developed on the unleveraged one.

A published rule is a hypothesis, not evidence of profit. We do not know how often these rules won, and traders who publish their methods are the ones who survived.

Sources

Developing Leveraged ETF Strategies (Alvarez Quant Trading), 4 Mar 2015 — own site, 2015
The text of the post was read; the result tables are images and were not read.

Rules

Filter

FilterTest 2007 – 2014 (the start of the leveraged ETFs’ data). Three ways: rules found on QQQ applied to QLD, rules found on QLD itself, and QQQ signals used to trade QLD.
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FilterWhy a 2x fund is not twice as good: daily 2x tracking misses on big days (on 30 Sep 2008 QQQ rose 2.9% and QLD 10.4%), and the daily compounding works against holding it for long. In 2007 – 2013 QQQ and QLD were within 0.02% of an exact 2x on about 80% of days.
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Entry

EntryBuy at the close when the 2-period RSI is below 5 and the price has fallen for two or more days (the buy comes on the second down day). No trend filter.
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Exit

ExitSell at the close when the 2-period RSI is above 50.
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Discipline

DisciplineFor QQQ, a 2x result would be a return of about 21.6 with a maximum drawdown near 22; applying the rules directly to QLD raised the return by about 50% but the drawdown by more than 150%, so QLD did not deliver a clean doubling. Trading QLD on QQQ signals came nearly to the expected doubling.
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DisciplineHe says he spent about five minutes on the rules, so he expects no strong results; the post is about method, not a strategy to trade.
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Not confirmed

Often attributed to this trader, but not found in the sources above. Not listed as his or her rules.

The tables with the actual return and drawdown for each instrument are images and were not read; the numbers above are from his written text.
TQQQ (3x) is not discussed in this post.

Limits of these rules

Eight years of data starting with the 2008 crash, no costs, no stop and a rule he calls untuned. Mean reversion with no stop on a leveraged fund can produce very large single losses. Read it as a lesson in method, not as a rule to trade.

Other traders

Rules are our paraphrase of the sources; only short quotes are verbatim. This is information, not advice or a promise of profit.