For anyone who's interested, especially if you don't yet understand why leveraged ETFs decay, the following explanation may be informative (I hope). I was suddenly inspired to write a quick pseudorandom simulation program and I copied the results over into Excel to make some visual aids. For starters, let's imagine we have an index that's at $100 and two ETFs both priced at $100 as well. One ETF tracks double the daily return of the index, and the other tracks double the inverse of the daily return. It's a common scenario we're all familiar with, so here's what we can expect to happen if the index is trending upwards.
Obviously, I'm assuming that the ETFs track the index perfectly, which isn't always quite the case in reality. Anyway, notice what effects compounding has had on the percentage return of the ETFs. Our index returned 13.94% over 4 weeks, while the bullish ETF returned 29.19%. Notice that this return is greater than 27.88%, the double of 13.94%. Meanwhile, the bearish ETF lost 24.14%, which is less than 27.88%. When the index trends up, anyone invested in the bullish ETF makes more than double the return of the index, while anyone invested in the bearish ETF loses less than double the return of the index. This is due to daily compounding. Now on to the second example, which is just the opposite.
Note here that the index has lost 12.70%, again over a 4-week period. However, the bullish ETF has lost 24.87%, less than double the loss of the index, and the bearish ETF has gained 26.00%, greater than double the loss of the index. What these two examples tell you is that the daily compounding of leveraged ETFs actually works in your favor, no matter which ETF you're invested in, so long as there is a definite positive or negative trend in the index being tracked. However, look at what happens when the index stays at approximately the same level.
As you can see, the index traded up and down a bit over the 4 weeks, but closed at the same price at which it opened the period. However, both ETFs are showing a loss. This is what we're talking about when we mention decay, and it's caused by daily compounding of the leveraged percentages. The above example shows the index as fairly stable, so check out what happens when it's more volatile.
In this last example, the index is considerably more volatile than before, trading more than 5% in either direction regularly. As a result, the decay of the ETFs is greatly magnified in comparison to the previous example. Which ETF experiences greater decay depends on the intermediate moves of the index. The lesson to be learned here is that volatility magnifies decay in leveraged ETFs, which is why the video in the OP chose 10% moves to make its point.
Of course, this doesn't mean you have to flip leveraged ETFs quickly or face the results of decay. They're okay to hold for as long as there is a definite trend in your favor, which could be several weeks or more. But many people are fooled into thinking that they're solid long-term investments -- after all, some leveraged ETFs even pay dividends -- and that's simply not true. An index that doesn't go anywhere -- or one that experiences a quick reversal -- can drain leveraged ETFs that track it, and volatility will only increase losses. Bottom line: know what you're getting into when you trade leveraged ETFs, and know when to get out.