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Why leveraging works
Take any average Index movement and plot that graph. Next, scale that graph by 1.5 and then overlay that scaled graph onto the first. From this, you'll probably notice that at times, the scaled line was below the main line, whilst at other times the scaled line was above the main line.
In effect, our 1.5 leveraged Index is the scaled line, so at times our leveraged position will under-perform the index. However at other times, our leveraged position will be seen to outperform the Index. That is, as the Index moves, the gradient of the main index line is amplified (made steeper) as you would expect from the leveraging.
When you consider the timescales involved between swings of under-performance to out-performance, you'll probably notice that generally these are quite frequent, possibly occurring several times each year. So if we are in no particular hurry to get in and out of the market - that is we are prepared to long term buy a hold a position in the stockmarket (as all investors should be), then we can simply wait until our position outperforms the Index before choosing to close that position, ahead of the Index.
So - providing the main Index line moves up and down with time, our 1.5 leveraged position will move in and out of under/over performance. One thing almost for sure however, is that at some points we will be over-performing the main Index.
This scaled graph can also be used as a very basic high low indicator for the likes of market timing. When the leveraged line is above that of the basic line, you might like to consider using that as a sell indicator. Similarly when the leveraged line is below the basic line, then you might consider that a buy indication.
