Monday, June 9, 2008

Index and Sector ETFs

ETFs stand for exchange traded funds. They are like mutual funds in a sense, but they trade like a stock on the exchange throughout the day.

Proshares is a company that has a number of these ETF and has also inverse ETFs that will rise as the underlying sector or index falls. When markets decline, these inverse ETFs give a way to profit without having to sell short or use options. This can be done in retirement accounts as well because the ETF trade just like a stock.

The first recommendation I have here is on SRS. SRS is the ultra short (double inverse) of the real estate sector ETF. If real estate related stocks decline, SRS will rise.


Buy SRS using a "Buy Stop" order of 90.00. Then place a stop loss order at 79.00 after entry.

Once a trade that I post here is entered, I will periodically post adjusted stop loss levels, and at times suggest an immediate exit instead of waiting for the stop loss to trigger.


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