Inverse ETF shares gained popularity in trading and investing community since their creation. Investors and traders like these instruments that allow making money when corresponding market or sector index declines.
The list of short ETFs is large. The number of tickers available for short sell etf trading these days is huge. How to select the best ETFs for your short sell trading needs?
I prefer to use a liquidity as a major parameter. The liquidity shows what short sell fund is used the most and it implies also the popularity of such a fund.
Top 10 most liquid inverse ETFs
I have used free etf screener available on the FinViz site to produce list of short etf tickers. I exported this list into excel and sorted it by Volume. It shows these top 10 most liquid inverse funds.
The most liquid funds track the major market indexes like the S&P500 stock market index, the Nasdaq 100 Market index, the Rusell 2000 Small cap index and US Treasuries.
Popular way to trade volatility
Inverse funds are also popular for short term trading of a volatility. The volatility increases especially during sell-offs in the market. These days it could be really profitable to trade these inverse exchange traded funds.
The most popular inverse exchange traded funds to short-sell a volatility are XIV and SVXY.
Good for short term strategies
These inverse exchange traded funds are good vehicles for short term trading strategies. They are very good for intraday traders but short-term traders could use them for swing trades as well.
They are not good for mid-term position traders and for investors who wish to hold investment for months. Inverse fund shares are not able to track movement of corresponding indexes well in long term periods.
Using these inverse funds should be based on your personal preferences and your trading strategies. It is always possible to short sell normal exchange traded funds. I personally like to use both ways.