Stanislav Bernuhov
Common Sense Trading
When you trade currencies or commodities, you may not be very aware of “market crashes” and large sell-offs on the stock market. However, for stock traders specifically, there’s much tension related to a recent significant decline in stock prices. Many of them have a cash account, i.e. don’t have the ability to play on the short side.
So, this article is for those who are still searching for profitable opportunities in the “red area” of falling stocks.
Option 1. Buying 3x inverted ETFS:
When there’s a bloodbath on the stock market, you can play one short side without actually selling any stocks. There’s a set of instruments designed exclusively for that purpose. They allow you to benefit from declining stock indexes, and sometimes, even certain sectors. I’m talking about “inverted ETFs” - complex structured products, which are traded on the exchange just like any stocks.
For example, you may purchase SQQQ, a 3X short for “QQQ”, which follows the Nasdaq stock index. When tech stocks are falling (and they are falling quite quickly), SQQQ grows. The recent decline of Nasdaq creates buying opportunities for SQQQ.
Option 2. Buying low-beta and negative-beta stocks.
Not all stocks are following the main trends. Some of them are more robust and have even strong opposite reaction when the broad market movements. The less stock correlates with a benchmark (a stock index), the less it’s beta is. Sometimes, it’s even negative.
For example, take a look at MCD - McDonald’s corporation. With a beta of 0.5 as of November 23, 2018, it shows outstanding performance in comparison to the broad market:
Or, let’s take SBUX (Starbucks). With a beta of 0.49 it seems bulletproof, considering the previous decline in major stocks.
Of course, not only beta parameters is important, but that’s one of the main factors which trader has to take into consideration while making decitions.
Option 3. Buying volatility ETFs.
Every time a stock market declines, we observe increasing volatility of ATM options linked to the corresponding index futures (VIX). This volatility can not only be observed but also it can be traded via volatility ETFs.
If you expect a stock index to fall, you can purchase VXX (short-term volatility) or VXZ (long-term volatility). You can see below what happens while the stock market sell-off:
Good luck and have a good trading!
Trading the financial markets is associated with increased level of risk. Past performance is not indicative of future results. All materials are provided for educational purposes only and by no means may serve as a trading or investment advice.
Editors’ Picks
EUR/USD softens below 1.1750 after Fed Minutes
The EUR/USD pair attracts some sellers near 1.1745 during the early Asian session on Wednesday. The US Dollar edges higher against the Euro after the release of minutes from the Federal Reserve's December meeting. The US Initial Jobless Claims report will be released later in the day. Trading volumes are expected to remain thin ahead of the New Year holidays.
GBP/USD trades flat above 1.3450 amid thin trading volume
The GBP/USD pair holds steady around 1.3465 during the early Asian trading hours on Wednesday. However, the Bank of England guided that monetary policy will remain on a gradual downward path, which might underpin the Cable against the US Dollar. Financial markets are expected to trade on thin volumes as traders prepare for the New Year holiday.
USD/JPY treads water near 156.00 as Yen traders grapple with multiple headwinds
USD/JPY remains caught in near-term congestion just north of the 156.00 handle during the final week of 2025’s trading year. Yen traders are battling headwinds on multiple fronts, with the Bank of Japan carrying much of the vexation risk for Yen markets.
Editors’ Picks
AUD/USD flubs key technical level as holiday season drains market volume
AUD/USD strung itself along the 0.6700 handle for the second day in a row as the Aussie-Dollar pairing grapples with end-of-year market volumes restraining overall momentum. The Australian Dollar is looking upward as the Reserve Bank of Australia inches toward a fresh rate hiking cycle, with the US Dollar under pressure across the board from a dovish Federal Reserve (Fed) poised for further rate cuts through 2026.
USD/JPY treads water near 156.00 as Yen traders grapple with multiple headwinds
USD/JPY remains caught in near-term congestion just north of the 156.00 handle during the final week of 2025’s trading year. Yen traders are battling headwinds on multiple fronts, with the Bank of Japan carrying much of the vexation risk for Yen markets.
Gold stable above $4,350 as the year comes to an end
Gold price got to recover some modest ground on Tuesday, holding on to intraday gains and changing hands at $4,360 a troy ounce in the American afternoon. The bright metal showed no reaction to the release of the FOMC December meeting minutes.
Zcash treasury Cypherpunk Technologies acquires $29 million additional tokens as ZEC battles key resistance
Zcash (ZEC) treasury firm Cypherpunk Technologies announced on Tuesday that it has acquired 56,418 ZEC for $29 million. The company executed the latest purchase at an average price of $514 per ZEC.
Bitcoin Price Annual Forecast: BTC holds long-term bullish structure heading into 2026
Bitcoin (BTC) is wrapping up 2025 as one of its most eventful years, defined by unprecedented institutional participation, major regulatory developments, and extreme price volatility.
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