3 Warnings Before You Play With Inverse ETFs Like DUST _ InvestorPlace invest in gold etrade

In other words, to take direct advantage of a dip in the value of the SPDR gold shares or the market vectors gold miners ETF, an investor would need a margin account that’s approved for shorting stocks. DUST, conversely, gains in value for owners with a long position in the fund when gold miner stocks lose value. As such, this leveraged inverse fund can — for better or worse — be purchased by anyone with a brokerage account, or even a retirement account.

See, while the direxion daily gold miners bear 3X shares might move up three times as quickly as gold mining stocks fall, they also fall three times as quickly when gold miners rally. Translation: you have to be right about your call, or you have to be very quick to make an exit when it’s clear you’re wrong.

Most anyone who has traded or is considering a trade in any inverse leveraged ETF probably knows that.Invest in gold etrade but, in the heat of the moment, it’s amazingly easy to forget both of those realities. It happens to even the most seasoned and experienced of traders; everyone is vulnerable to buying into the “it has to reverse soon” fallacy.

That’s not to say you in particular shouldn’t dabble in these riskier investment vehicles. But, for what it’s worth, there are plenty of traders and investors who have been in a DUST position, but shouldn’t have been. It is possible you’re one of them.

• the direxion gold miners bear 3X fund and other inverse leveraged funds don’t belong in any retirement account. That’s not to say they can’t do well for you in an IRA, but assuming a retirement account is money you’ll actually need for retirement, the risk of a leveraged inverse gold fund in an IRA just isn’t worth it.Invest in gold etrade

• the direxion gold miners bear 3X shares shouldn’t be owned without a pre-determined stop-loss in place at all times. As was noted above, in the heat of the moment, discretionary discipline can get thrown right out the window. That’s when trouble begins. And with these etfs moving three times as fast as their underlying index, it takes very little for an adverse move to cause trading anxiety to skyrocket, which is when serious errors in judgment start to crop up.

• the direxion gold miners bear 3X fund isn’t a core piece of any serious portfolio, and certainly shouldn’t be a portfolio’s biggest (or only) holding. This probably isn’t a problem for most everybody, but undoubtedly there are a few people out there who would not only bet the farm on such a fund, but would remain in that bet for years, calling their stubbornness “commitment.” this ETF is largely designed to be a short-term hedge.Invest in gold etrade nothing more.

Bottom line? The next time you find yourself interested in getting into a direxion gold miners bear position, put in writing (1) exactly why now’s the right time to buy it*, (2) what your target price is, and (3) where you’re going to bail out if things don’t go well.

In other words, to take direct advantage of a dip in the value of the SPDR gold shares or the market vectors gold miners ETF, an investor would need a margin account that’s approved for shorting stocks. DUST, conversely, gains in value for owners with a long position in the fund when gold miner stocks lose value. As such, this leveraged inverse fund can — for better or worse — be purchased by anyone with a brokerage account, or even a retirement account.

See, while the direxion daily gold miners bear 3X shares might move up three times as quickly as gold mining stocks fall, they also fall three times as quickly when gold miners rally.Invest in gold etrade translation: you have to be right about your call, or you have to be very quick to make an exit when it’s clear you’re wrong.

Most anyone who has traded or is considering a trade in any inverse leveraged ETF probably knows that. But, in the heat of the moment, it’s amazingly easy to forget both of those realities. It happens to even the most seasoned and experienced of traders; everyone is vulnerable to buying into the “it has to reverse soon” fallacy.

That’s not to say you in particular shouldn’t dabble in these riskier investment vehicles. But, for what it’s worth, there are plenty of traders and investors who have been in a DUST position, but shouldn’t have been. It is possible you’re one of them.

• the direxion gold miners bear 3X fund and other inverse leveraged funds don’t belong in any retirement account.Invest in gold etrade that’s not to say they can’t do well for you in an IRA, but assuming a retirement account is money you’ll actually need for retirement, the risk of a leveraged inverse gold fund in an IRA just isn’t worth it.

• the direxion gold miners bear 3X shares shouldn’t be owned without a pre-determined stop-loss in place at all times. As was noted above, in the heat of the moment, discretionary discipline can get thrown right out the window. That’s when trouble begins. And with these etfs moving three times as fast as their underlying index, it takes very little for an adverse move to cause trading anxiety to skyrocket, which is when serious errors in judgment start to crop up.

• the direxion gold miners bear 3X fund isn’t a core piece of any serious portfolio, and certainly shouldn’t be a portfolio’s biggest (or only) holding.Invest in gold etrade this probably isn’t a problem for most everybody, but undoubtedly there are a few people out there who would not only bet the farm on such a fund, but would remain in that bet for years, calling their stubbornness “commitment.” this ETF is largely designed to be a short-term hedge. Nothing more.

Bottom line? The next time you find yourself interested in getting into a direxion gold miners bear position, put in writing (1) exactly why now’s the right time to buy it*, (2) what your target price is, and (3) where you’re going to bail out if things don’t go well.