When the market gets rough, one of the ways swing traders and day traders can keep active is to consider trading a bear market etf. There are different types of bear market ETFs to consider. In this article I will point out the different types and provide a list of popular bear market ETFs for you to choose from to make your search easier.
As always, make sure you do your own due diligence and research each individual ETF on your own. The Trade Locker provides information to you for your convenience and for entertainment purposes only. You must make any investment decisions on your own since we do not endorse any specific ETFs. With that said, there are important things you should know about Bear ETFs before you check out the list.
Each Bear Market ETF is an Inverse ETF
As you probably already know, inverse ETFs trade the opposite of an ordinary ETF. It is like you are short selling without actually having to short sell. These ETFs are betting against the index they represent. For example, if you think the price of gold is going to fall you would purchase an inverse gold ETF. The advantage of choosing these ETFs over short selling is that you do not have to search for brokers willing to make them available and you can avoid short selling fees.
Be careful! Some Bear Market ETFs are Leveraged!
Leveraged ETF’s have a multiplier so you take the index and multiply it by whatever the individual ETF multiplier is. The most common types are 2x and 3x multipliers. For example, if an ordinary ETF closes at $1 a share, a 3x ETF would close at $3 a share. The good news is you can make much more profits if you guess the market direction correctly. The bad news is you can lose triple per day if you are wrong. Please note: If you plan on trading ETFs with multipliers and plan on holding these overnight your losses can be exponential. Thus, these are really only suitable for day traders or short term swing traders unless you are so certain an index will fall long term that you are fine with the risk and can live with the possibility of losing every dime you sink into them.
You can get Bear Market ETFs that Follow a Sector.
This is a nice feature to have if you have a strong inkling that a specific sector is going to plummet. For example, if you feel that all the financial stocks are going to fall you would look for an inverse financial ETF.
There are many other Types, to keep things simple I have Provided a List of Popular Inverse ETFs with a brief Summary of Each:
If you have any questions or comments about a specific Bear Market ETF on this list please do so below. If there are any important ones not on the list you can add them below as well. Remember The Trade Locker is a free online stock market community where traders can network with one another. This service is and will always be 100% Forever Free so please feel free to add any information that you think will help our community below. Our aim is to help the individuals in our community to become better traders at no cost. Also, Please don’t forget to check out our stock message boards and our forum as well.