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5 instruments to trade when the stock market is falling

March 13, 2020 14:47
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short selling, tesla, vix,

Taking the oppurtunity to make the most out of a volatile market, with caution of course, is something that pretty much everyone who is into trading loves. A bearish market does not necessarily mean that you are loosing money. Shorting stocks or going into a currency where one is weaker by the hour is definitely worth considering for anyone who has the extra money to be active on such a volatile market.

If you sit completely still and do nothing when the stock market goes down, there is a significant risk that you will lose a lot of money. Instead, Markus Jalmerot at Short Selling recommends that you talk to an advisor and look at short selling opportunities. Some potential shorting possibilities with CFD's include the minor currencies that's exposed to a slowdown for their export, such as the Swedish Krona (SEK). Many others investors such as Oslo Asset Management are shorting oil service companies. Another hot pick where both Citadel and Marshall Wace are going short include Air France-KLM, among other airlines and travel related companies that might see many short sellers thanks to CFDs. Lufthansa's CEO called Sars “the worst-ever crisis” according to FT, and Coronavirus might be worse for the travel industry. ShortSelling.com finds that travel related companies are likely to struggle tremendously going forward and might be on top of some possible short-term investments with CFDs.

Several speculators and medium-sized investor are going into trading VIX (Volatilty Index), which is skyrocketing right now and might continue for a while. Here, ShortSelling.com bring up 7 instruments to look at in these troubled times with Coronavirus, volatility and stock market crash on the headlines. Don't miss out on fantastic short selling opportunities with CFDs, sign-up for Skilling today!

Modern Building

Modern Shortening: A cheap & fast way to get exposure to falling markets

Some of the better & most used trading opportunities when the stock market starts to go down is to look into shorting of shares, commodities and cryptocurrencies with CFDs. The traditional method of shorting means very high fees and without access to outstanding bankers, you don't even have the opportunity. Further, the costs are often very high for traditional short selling where you borrow shares, since you usually have to pay 10-15% upfront in fees and have unlimited downside. The good news is that the modern type of short selling of shares and indices are by CFD's. The Scandinavian owned website Skilling, are experts on short-term opportunities, with over 1000 instruments to go short in with help of CFDs. Are you looking to go short in Tesla? Nasdaq 100? Wanna sell Bitcoin even if you don't own it?

Rating: 9.57/10
Minimum deposit: €100
Description: Skilling is one of the upcomers by Swedish & Norwegian founders. They got a great mobile and desktop interface, perfect for shorting stocks and they even allow technical indicators on mobile.
Risk warning: 82% of non professional CFD accounts lose money.

The possibilities are endless, the spread is really low and there is no upfront fee to get the opportunity to short sell. So completely without owning any stock or index, you can believe that any instrument will go down and have the opportunity to make good money from it. Sign up for a CFD broker, click on the “sell button” and you're off to profit from short selling with CFDs. Try Skilling which has fastest broker for closing any trades with CFDs!

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Short selling indices such as FTSE, Nasdaq or S&P500

Going short in any index might be just about the perfect timing, according to many experts such as Morgan Stanley that predict there will be a recession in the US this year, and probably in most countries around the world. This week is probably just the start of massive downside for many shares. With firms such as Plus 500, you can trade Index CFDs. Some examples include Europe 50, Italy 40 (hot?), France40, Germany 30. USA 2000 or USA 500. Go into Plus500 or Skilling if you prefer, and select “SELL” on any index you like to trade. Then, you get the price and are able to profit from a downturn in the stock market. When most other people are bleeding money, you are cashing in. Can it be better? Sign-up for Plus500 today and start trading Indices!

Shares falling are often associated with increased volatility. Is it time to trade VIX?

Volatility is something that is classic with major declines in many different markets at the same time. At the moment, VIX is starting to reach quite high levels, but traditionally it has been advantageous to trade VIX on a volatile stock exchange. What does VIX stand for? It is an abbreviation for CBOE's Volatility Index or VIX Index. The volatility is measured by the frequency and magnitude of price changes, both upwards and downwards. The VIX Index shows the expected volatility through aggregated weighted prices on the S&P 500 Index. The more drastic fluctuations, the higher the level of fluctuations on the stock exchange. If you believe that volatility will increase, perhaps by further declines in the stock markets, then you can buy VIX. If you rather believe volatility will be lower, then you sell VIX (eg. don't believe in it).

How is VIX used?
The VIX index can be used as a barometer for market uncertainty. It can give market participants a measure of the expected 30-day expected volatility in the broad US stock market. The stock market usually goes up slower than it goes down and increased volatility is normally expected during the downturn. Coronavirus disease (COVID-19) gives lots of side effects in the economy, such as shops closing down, lower productivity and travel companies loosing all of their clients and having troubles to pay.

Smaller currencies such as SEK loose against EUR and USD

Yesterday, SEK lost over 2% against the USD at its worst. Luckily, the Swedish currency has recovered a little and stabilised during the last 24 hours. Currently, USD/SEK is around SEK 9.75 per dollar. If the stock market decline continues and puts additional pressure on the krona, then maybe we will see 10 SEK per USD before the month is over? In any case, there are good trading opportunities for anyone who are keen on trading currencies such as USD/SEK. Against the euro, the krona lost a modest 1% yesterday and is currently around SEK 10.84 per EUR. No one would be surprised if we reach 11 SEK per Euro before next week is over. Try Skilling with Scandinavian founders or the British listed company Plus 500 if you are keen on trading against the krona!

Is gold always a safe bet?

When the stock market goes bearish it can often be a place to trade gold. In recent days, gold has been more volatile than usual and may soon be considered undervalued. In just a couple of days day, gold (XAU) has gone from $1700 per ounce (28.34 grams) to $1590. But even the most risky portfolio should have some of its assets invested in gold, if nothing else to protect itself from temporary price declines and to spread the risk, in a world of uncertainty. Buying a stable metal such as gold to protect yourself from falls, is what many tend to do. Short Selling recommend Ava Trade, which has really good spreads and quick execution for commodity trading. Try AvaTrade today and make money from gold and other commodities!

Bitcoin Jordglob

Is 4000 the next level of support for Bitcoin and 100 for Ethereum?

For anyone trading Bitcoin or Ethereum, there might be some dark times ahead. Bitcoin has halved in value the last month, and yesterday alone it was down 20%, while today is showing a 6% decline for BTC. Less than a month ago, Bitcoin was priced at $10,000 per BTC, while today (March 13, 2020) it has fallen below 5,800. Ethereum has also reached a rate of USD 135, but was testing the support of $100 earlier today. For all short selling lovers, there are excellent opportunities to sell Bitcoin or Ethereum even though you do not own it today. The answer is called modern CFDs and sites like AvaTrade or Skilling are great for trading cryptocurrencies, whether you want to short Bitcoin or buy Bitcoin because you think a turnaround is close.

How do you make money when the stock market goes down?

To go short or short selling as it's also called, is both the most established and recognised method of making money when the stock market falls. There are two types of short selling: The so-called “traditional shorting“, which means that you “borrow” shares from someone who is willing to lend it out for a specific period of time. This normally involve a cost between 10-15% of the value directly. Then you sell the borrowed asset, wait for a downturn and then buy back the borrowed stock, hopefully cheaper. What smart traders do is different. They turn to modern short selling, which can be done with CFDs and don't require and upfront cost. You don't have to find anyone to borrow from either. Online trading brokers such as Skilling or Plus500 offer you to go short in 1000s of instruments with CFDs. Just press the “sell button” and you are ready to profit from the downturn. What are you waiting for? Make money when the stock market goes down, you too!

Which shares are doing well when the stock market falls drastically?

In the end, it depends a lot on what caused the stock market downturn. Many earlier drastic falls are based on an overvalued technology sector. So a good suggestion is to avoid technology right now, and rather go long in pharmaceutical companies. Otherwise, there is always the opportunity to use CFD's and bet against that the stock market will go up forever. In the end, it's been over a decade now..