What is the DSLV ETF?
The DSLV investment seeks to replicate, net of expenses, three times the opposite (inverse) of the S&P GSCI Silver index. The index comprises futures contracts on a single commodity. The fluctuations in the values of DSLV are intended generally to correlate with changes in the price of silver in global markets.
So what is DSLV in English? DSLV is a three times short of silver futures. DSLV is a good way to get exposure to the short silver market without shorting actual futures contracts. We have found that DSLV tracks closely with the inverse of SLV on the daily price chart.
Can a trader trade DSLV Options?
We don’t recommend that a trader trade DSLV options. The volume for this ETF is low. This is not good when trading options.
DSLV ETF VS SILVER FUTURES
What are The Benefits of using the ETF DSLV?
There are many great benefits to trading the DSLV ETF. One is that it is a way for the small trader to trade in the silver futures market. With a futures contract a trader needs much more capital to trade (if they are considering risk). When trading the DSLV ETF a trader can trade any amount. The trader does not have to consider contract expiration.
What are The Disadvantages of using the ETF DSLV?
One of the main disadvantages of using the DSLV ETF is a gap in over night positions. The futures market is open all day and night with a small break. That means that the silver market trades night and day. With this type of trading you may get some gaps on overnight positions. If the trader had a silver position that hit a stop during the night the trader could close the position. With the DSLV ETF the trader would have to wait until the stock market opens to close that position.
Trend Following DSLV
The DSLV ETF is a good ETF to follow with your short-term trend following strategy. Historically the silver futures market has been a choice market for trend following futures traders.
DSLV Shares are listed on the New York Stock Exchange and trade the same way ordinary stocks do. It is possible to buy or sell DSLV Shares continuously throughout the trading day on the exchange at prices established by the market. Additionally, it is possible to place market, limit and stop-loss orders of DSLV Shares.
As we stated earlier DSLV is an inverse ETF. That means that it should do the opposite of silver. If silver goes up by 1% then DSLV will go down by 3%. It does the opposite of silver by three times.
Silver ETF 3x
So why do we use a 3x reverse leverage ETF instead of just shorting SLV? When trading a system sometimes the system calls for a trader to trade more money than they have in their account. This is calculated based on volatility. If the trader was trading silver futures it would be no problem because they are so highly leveraged. When trading SLV it is a problem because they don’t allow for extra leverage. This ETF solves that problem by the leverage that it offers.
With any investment there are some risks. If you are going to trade an ETF that uses leverage it is good to have a trading system. If you don’t then you could lose a lot of money quick.