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Registered User
Joined: 1/12/2009
Posts: 235
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I am somewhat new to ETF's and I am trying to find out what websites or books you guys can recommend to learn more especially about the Inverse ETF's now that it appears we are in a downtrend. How do you guys determine what particular ETF you want to invest in? I noticed in Telechart that it has a list of about 795+ different ETF industry groups. What type of scan do some of you perform to find a good inverse ETF? I am mainly interested in just the 1x inverse funds. Can't handle much more risk than that. Thanks in advance.
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Registered User
Joined: 6/6/2005
Posts: 1,157
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Hey traderm,
I use the same type of scans I use for long candidates. I prefer the 2x Proshares so I spacebar through all of them looking for either bottoming patterns (a thrust out of a horizontal channel) or continuation patterns (using the dragon to scan for triangles) after the initial bottom thrust.
Some of the ETFs have low volume so you may want a volume filter. Also, I either stay with the major indexes (spy, DIA, qqqq for 1x ETFs) or the ETFS with the most volatility -- financials, real estate, basic materials.
I think they're a great way to trade and you just about zero out the chance of a massive downside gap -- though during sept of last year there were some pretty big gaps in the 2x funds -- menaing 10%+.
David John Hall
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Registered User
Joined: 2/5/2006
Posts: 1,148
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QUOTE (traderm30) I am somewhat new to ETF's and I am trying to find out what websites or books you guys can recommend to learn more especially about the Inverse ETF's now that it appears we are in a downtrend. How do you guys determine what particular ETF you want to invest in? I noticed in Telechart that it has a list of about 795+ different ETF industry groups. What type of scan do some of you perform to find a good inverse ETF? I am mainly interested in just the 1x inverse funds. Can't handle much more risk than that. Thanks in advance.
for sectors check out the ishare's and spdr's.
and the 2x's and 3x;s etfs are designed for short term trading. they do not track the indexes over long periods of time.
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Registered User
Joined: 1/28/2005
Posts: 6,049
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I look for the weakest.
The idea is its been in the strongest sector during the bullish
period. (since its inverse it will perform the worst)
Also if its had the tar beaten out it the risk of going lower should
be reduced.
Your sort of buying "Short value".
I agree its a good idea to stick with 1X until you get use to it.
Thanks
diceman
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Registered User
Joined: 12/18/2008
Posts: 150
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inverse etf's are basically the opposite of a plain jane etf.. so instead of short selling an etf, you just buy an inverse etf
2x also known as "ultra" etfs basically just move at 2x the rate of an etf... so lets say you had a choice between ETF-A and Ultra ETF-A
if ETF-A rose 1% then Ultra ETF-A should rise 2%
then there are 3x etfs which move 3x the speed of an ordinary etf. however when it comes to 3x etfs you have to be a bit more careful as they are created by using options and even if you have a 3x bull etf and 3x bear etf, they can both fall because of option decay.. but thats a long story in itself
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Registered User
Joined: 3/29/2005
Posts: 56
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What do you experts think would happen to inverse ETFs if the uptick rule and/or a ban on naked shorting were to be adopted? Would they take a large hit or suspend trading entirely?
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Registered User
Joined: 7/1/2008
Posts: 889
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no. inverse ETFs don't short stocks, they use derivatives
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