magician

DXD = UltraShort Dow
DOG = Short Dow

These are ETFs.

Clutch.

was the way i explained it how it works? how would i go about doing it? etrade or something?

magician

If you want to invest in the Dow, you can buy shares in DDM. The goal of DDM is to achieve twice the performance of the Dow; e.g., if the Dow is up 1%, DDM tries to be up 2%. DDW does this by holding some of the Dow stocks, but also holding other stocks as well as derivatives - equity swaps, for example - to try to double the performance of the Dow.

If you want to invest in the inverse of the Dow - so when the Dow is down 1% your investment will be up 1% - then you can buy shares in DOG. Again, this is an ETF that invests in stocks as well as financial derivatives to try to achieve this performance.

If you want to invest in twice the inverse of the Dow - when the Dow is down 2% your investment will be up 4% - buy shares in DXD. More derivatives.

Penforhire

Clutch, yes, use e-Trade, Scottrade, or any of the other brokers that are small-investor friendly. You give them a check or on-line transfer to open an account and then use their on-line buy and sell tools.

hobbes235

there's also the etf for the s&p500, which is:

sso - double long proshare s&P
sds - ultrashort s&p

Clutch.

couple of questions:

What is ETF?

And if I wanted to invest in the DDM, for example, that is the actual abreviation of the stock that I would buy? like I want $1,000 of DDM stock?

You say that DDM tries to achieve 2% of the DOW, does that mean that anytime the DOW goes up DDM WILL go up, or just usually?

Thanks in advance, its starting to make sense.

trainwreck

etf is a fund that trades like stock with live prices as opposed to closing day prices.

DDM is the actual ticker symbol that you would buy. it trades exactly like regular stock.

and yes, it is correlated directly to the dows performance.

magician

It's pretty darned close, but not perfect: the correlation of daily returns since 6/22/06 is 0.9786; perfect correlation would be 1.0000.

In that time the Dow is off 25.3%; DDM is off 52.4%: slightly over twice as much.

Clutch.

do many people invest this way? why or why not? and if i buy into the DDW and the dow goes down then i lose twice as much money right?

Bri

i use the 2x leverage for the S&P500... The market doesn't operate on fundamentals anymore but mostly technical... Picking companies with strong fundamentals doesn't work in this environment anymore (at least in my opinion) so just trading the index works the best for me.