One comment: Its a mathematical truth to say "the potential for loss is unlimited."
In reality, every short is a trade, and every trade should be married to a stop loss.
So theoretically the potential loss is infinite, but to a good trader the max theoretical loss is whatever stop amount you are comfortable with . . .
Agree absolutely, Barry. Risk management is paramount. Your point that the ETF shorts have better liquidity and efficiency are well taken.
The point I'm trying to make is that should one happen to be correct with the general market direction, these products provide a favorable daily compounding effect which make them interesting for people willing to give them a longer leash -- both in time and in allowable stop loss.
Thanks a lot for commenting.
ML
Investing in shares is always a gud option but however if u r a novice then I suggest u do a gud research of the market before u enter it.
regards,
Online stock market trading
There's another wrinkle to ProShares short ETFs vs. regular shorting: margin considerations. With ProShares ETF you can "short" the market 100% of your account balance if you want to without having to maintain margin. Going short QQQQ or SPY requires borrowing shares and maintaining a minimum RegT margin to cover, making it impossible to go 100% short in the traditional way.
Or, to flip the margin idea the other way, if you have a really strong conviction the market is going down, you could use margin in your account to buy additional UltraShort QQQQ, effectively magnifying the leverage to higher than 2x.
Commenting by HaloScan
