Chris Rowe

A New Way to Profit From the Falling Market

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This is the type of thing that can make you massive profits when you trade it right. However, that can lure you in, causing you to put a lot more money on the table, and that's when the trade goes the wrong way.

It's very easy in a market like this, one that has massacred so many trading accounts, to start to visualize anything as your great hope, the answer to your prayers, the lifeline that will pull you out of this mess and so on. Don't do it. If you've lost 60% of your portfolio, you shouldn't expect to make it back in 12 months.

Now, I don't want to scare you out of profits. You absolutely need to have bearish exposure in a market like this. So, use these ETFs to hedge in this latest market decline, but be smart, and don't overexpose yourself.

And I wouldn't be too quick to exit these ETFs if they move in the wrong direction. While the market may snap back for a quick rally, it's going to go lower than today's levels.

So, what do you do? You take a comfortable position and sit, as opposed to taking a position that's too big for your nerves.

No matter what you do, you have to be willing to play the downside of this market.

If triple-short ETFs seem too risky for you, perhaps the double-short ETFs are more your speed. These investments seek to profit twice the inverse of the sector index they mirror. They are a little less risky that the 3X ETFs, but they are still leveraged 200%, so the same warning applies.

Here are a few to consider:

• UltraShort Basic Materials ProShares (SMN)
• UltraShort Consumer Goods ProShares (SZK)
• UltraShort Consumer Services ProShares (SCC)
• UltraShort Financials ProShares (SKF)
• UltraShort Health Care ProShares (RXD)
• UltraShort Industrials ProShares (SIJ)
• UltraShort Oil & Gas ProShares (DUG)
• UltraShort Real Estate ProShares (SRS)
• UltraShort Semiconductors ProShares (SSG)
• UltraShort Technology ProShares (REW)
• UltraShort Utilities ProShares (SDP)

Chris Rowe is the Chief Investment Officer for Tycoon Publishing's The Trend Rider. To learn more about him, read his bio here.