The gamification of the stock market has found its ultimate weapon.
According to a new study co-authored by Direxion, Vanda Research, and The Compound Insights, individual investors are the undisputed whales in the leveraged ETF space. Retail traders now account for nearly 90% of all trading in these high-risk, single-stock speculative vehicles.
📊 THE EXPLOSIVE DATA:
- Volume Dominance: Trading in these instruments accounted for 8% of all trading volume across U.S. exchanges last year.
- Rapid Expansion: There are now 355 leveraged single-stock ETFs listed in the U.S.—an incredible 275 of which launched just since January 2025.
- Hyper-Growth: Trading volume is compounding at a 29% annual clip, massively outpacing the growth of traditional stocks and options.
⚖️ THE REGULATORY TUG-OF-WAR: Asset managers want more juice, but the SEC is tapping the brakes.
- The Push: Issuers like Direxion are actively filing for 3x daily exposure products tied to volatile darlings like Nvidia (NVDA) and Palantir (PLTR).
- The Resistance: The SEC has repeatedly pushed back against 3x and 5x single-stock products, citing investor protection concerns and the mathematical decay of daily leverage.
🔥 THE STRESS TEST: These products aren’t just a bull market phenomenon. During the April 2 market selloff (triggered by President Trump’s “Liberation Day” tariff announcements), retail activity in these ETFs spiked so high that it accounted for up to 40% of all U.S. trading volume at certain peak moments.
💡 ANALYST TAKEAWAY: The ETF structure was invented to provide cheap, diversified, long-term beta. Today, asset managers have adapted it to deliver highly concentrated, short-term speculation. With retail traders making up 40% of total market volume during stress events via these vehicles, leveraged single-stock ETFs are no longer just derivatives tracking the market—their hedging flows are large enough to actually move the underlying stocks. The tail is now wagging the dog.
👇 Wealth Managers: How are you handling clients who are actively trading 3x NVDA ETFs in their self-directed brokerage accounts?