ETF question.

Hello.

Most of this week, I have read and heard so much negative news about the stock market, mainly in regard to all of the selling going on this week and little buying. Since I am trying to understand the market better, I was told that in order to buy, you must have a seller. In order to sell, you must have a buyer. Yet with looking at how down the market has been the past 2 or so months, I have mainly been paper trading high volume Ultra Short ETFs (i.e. SDS, that has an average and daily volume of 10,000,000+ but it actually was over 100,000,000 today alone), so wouldn’t that mean that if a stock shows that it traded at 5,000,000 that day, that at least 5,000,000 people did buy and that 5,000,000 people sold?

Yet if I am to understand the news reports correctly, each time that a share was sold, there had to be a buyer to buy it . . . yet I can not understand the statement in the news that there was a lot of selling going on (yesterday, 11-20-08) and not much buying? Or is it that ETFs are categorized separately and are not part of the daily statistics when the buying and selling of stocks are reported?

Glen

Hey there Simonyadig. I greatly appreciate the fascinating insight that you have provided to my question. WOW!!! Up until now, I did not know about that particular aspect of how the market works (i.e. a market maker is there to buy and sell stock, even when there is not a normal investor/trader on the other end).

One final question on this subject . . . in the case of my paper trade of EEV (with a daily volume of 1,000,000+), since my ETF had gapped-down overnight on Thursday night by $21.65, if I saw that the ETF was still going down when the market opened on Friday, in the real world do you think that I could quickly sell my 100 shares (if I had purchased 100 shares on Thursday at $126.07 per share) within a few minutes of submitting my “sell at market price” order on Friday morning? Because looking at the data on Ultra Short ETFs, when certain ones go down, 1 and 2 minutes can be sooooo Ultra Crucial to cutting the loss and making a profit and or trying to avoid losing hundreds of dollars per minute. However, EEV opened at $104.42 on Friday, and went back up a little during an hour and a half (upon opening), before it went really down towards the end of the day. Yet assuming that this ETF would have keep going down during the day on Friday, I was curious to know if you think I would be able to easily sell 100 shares of it within a few minutes of my "sell at market price order" (to better cut my losses) or would I have to wait for a buyer even though my ETF would be falling in value every minute?

Glen