I trade some volatile, high tech stocks. Many of these now have inverse ETFs that are a lot cheaper because they are so beaten down on the high flyers. I wonder if owning an inverse ETF on say AMZN would be better. because AMZN can and will bounce $10 in a day. I am usually right in direction but the drawdowns can be brutal and effect my psychology. Not gonna lie, being up $5k in one week, then down $3k the next week is not my dream job.
Thanks, I still have a small account and some of these stocks are expensive and locking up all my cash.
since the public is brainwashed into believing that investing can only mean to buy something and hope it goes up - many professional money managers use inverse etf's to make most their money on the short side. have you ever noticed that for a stock generally to increase in price it's a slower process than the drop like a rock to the downside? the public goes long the professionals go short. some traders have all their money in cash and just have sell orders waiting in the market for fast run downs. they are in fact constantly short the market at levels they know will not bounce. typically this is 2.5% - 5% below the monthly average price. any stock holding below that level should be a wake up call to an investor.
Yup, I have noticed stocks go down much faster. My method is very good at determining when a trend has exhausted itself. It works going long too but many stocks now have a much greater downside than up at the moment. i am getting close to thinking shorts are the safer play in the market long term. Time will tell.
I made a lot of money shorting the financials during the GFC in 2008 by using the first of the inverse leveraged ETFs -- SKF which is -2X XLF. At least until the free marketers in the Bush administration decided to ban short selling in the TBTF banks. That's when I knew this country was fucked.
The stock I shorted was NVDA at $135. I got out last night because I was expecting a bounce. I bought the inverse etf at $3 something. The stock went down another $5 after the open. Regardless, I do not want to hold the beast short. I made about $12 on the trade but realize it can and will run $20 on any given day out of nowhere.