If your looking to catch halibut of any size live sardines are just fine. I wouldn't use dead bait unless that's all you have. Now the correct depth you should be fishing is something you need to find out for your area. That is only known if you have good intel or you just put in the legwork of drifting different areas and or depths.
Now if your trying to concentrate on larger halibut...you need to fish bigger baits, as in 8-10" or larger mackerel. You will catch less fish this way but your resulting catch will be bigger. Another thing...fishing strictly for halibut, it's not unusual for you to go weeks or even months without catching a single one. So sometimes you have to be very patient.
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