Inverse ETFs vs. Short Selling
An advantage of inverse ETFs is that they do not require the investor to hold a margin account as would be the case for investors looking to enter into short positions . A margin account is one where a broker lends money to an investor to trade. Margin is used with shorting—an advanced trading activity.
Investors who enter into short positions borrow the securities—they don't own them—so that they can sell them to other traders. The goal is to buy the asset back at a lower price and unwind the trade by returning the shares to the margin lender.
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