Daytrading with SDOW – Making Money Betting Against the Stock Market

I recently cashed out all my stock.  I was invested in SRS (a short on real estate) and had a little bit in SKF (betting against financials).  After the stock market dropped 500 points yesterday, my stock was up a nice chunk and ultimately I sold when it was down about 450 which was a good move because the stock market went up 60 more points.

With a wad of cash in my trading account, I took to day trading today.  I had bought EK and MU stocks, which are regular stocks, in early trading but then I turned to SDOW or “UltraPro Short Dow30″.  SDOW is a short against the Dow Jones Industrial.  Basically, you’re betting against the stock market even though the stock market is comprised of more than just the DJI.

Right now there is a lot of bad economic data in the news and the focus is especially on Greece which is going to default on its debt.  I am convinced the stock market will go down considerably more in the coming months but I’m day trading and as far as day trading is concerned, I’m only worried about today.

I've been staring at this real-time trading app has been on my desktop all day.

The pros and cons of buying SDOW are several.  First, the good.  SDOW will get you a ton of action which is what you want in day trading so you can make money. What I mean by this is the stock market has been very volatile lately and had a lot of swings or went one way or the other. Some stocks that you trade don’t have much volume so you can’t gain traction in day trading with them.

Another reason to buy SDOW is the high potential. I see the world and US economy as easier to go down than to go up. There is much underlying debt and bad news waiting out there, not the other way around.

A third pro for buying SDOW is the lack of leverage. Many shorts and ETFs are leveraged 2x or 3x. This is very troublesome should the market or index you’re betting against go up because you lose 2 or 3 times.

Last thing I want to mention is using SDOW as an insurance for your other stock positions just in case things go wrong. Having a short on the Dow Jones Industrial can really cover your ass should the market tank. Then again, if you’re buying insurance of your stock and limiting your risk, you’re also limiting your gains.

Of course, there are downsides to playing the stock market and in particular day trading SDOW. First, the word volatile comes inherently with risk. While yes, the stock market could go down, it could go up too. Any little bit of good news will turn the stock market into a buying frenzy. I know, I’ve watched it happen over again. Sometimes the stock traders will even turn better bad news into a reason to buy stock. For example, the headline will be job losses not as bad as expected and the stock market will boost up. As the holder of an ETF, you’re sitting there thinking, hey what the hell they still lost jobs didn’t they?

One more con to trading SDOW is you have to pull for the bad guy, losses.

And with every bit of financial information, as always, know you can easily lose money. Invest smartly and don’t risk what you cannot afford to lose. Is this like gambling? Yeah.

I Want Money on Making Money Betting Against the Stock Market and Day Trading SDOW