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Registered User
Joined: 9/21/2005
Posts: 566
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Just wondering if you short stocks as part of your trading? Have you done research into shorting - what is your take on in in general? Diceman, says the newbies should not do it (he's no fun so I thought I would turn to you instead) 
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Registered User
Joined: 10/7/2004
Posts: 2,181
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jc
DISCLAIMER #1: I'm honored that you're asking me this or any question but TO ALL FORUM MEMBERS: I am not on Diceman's level of knowledge. I'm always happy to help when I can but, truly, his level of knowledge in every category I can think of is advanced dramatically beyond my own. As I said, glad to help when I can but don't think of me as on parr with Diceman.
DISCLAIMER #2: While you know I love humor and having fun, I must say, Diceman has outdone me on more than once occasion in the "funny" department. You see, I'm just "stupid" funny, slapstick silliness is about all you can hope for from me. Conversely, Diceman actually thinks before he says something funny (a foreign concept for my style of humor).
OK, we're back and we're talking about shorting. I have shorted before and with a modicum of success. I use the price under the LR30 and near the top of its channel, a lack of volume on up days, 1-2-3 pattern on the lows or ascending lows after a MCTTF day while still below the LR30 for entry points.
BUT! Shorting is extremely dangerous and I DON'T wait for the stock to tell me when to get out as I do with a long position. I look for a stock that I think is going to drop 10% and I get out after 3. I don't like shorting, not at all.
I'd say this, if you're ready to put in writing a somewhat thorough explanation of how you're going to go about shorting and why, and you can back up what you're saying with extensive paper trade results or some other quantitativde research, then, go for it. But, remember, losses from going short are unlimited. Going long, a stock price can only go to 0.
I commend to you the fact that there are almost always good long positions to take. Get good at going long because there are ways to do that in almost any market.
I'm with Diceman on this one. (Aw, heck, I'm with Diceman on most of his opinions...he makes too much sense!)
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Registered User
Joined: 9/21/2005
Posts: 566
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Thanks Tobydad. I think you sell yourself short on the humor category (very funny would be my vote). Didn't realize Diceman had a good sense of humor too with all of his other strong talents (a man on top of his game).
My results to date on shorting have not been on par with going long. Maybe a reflection of market conditions? Or, maybe a reflection that shorting is harder. Or maybe some combination of both.
My thought for now is to look at industry groups first and look at stock setups second. Case in point, the reit sector up to a few weeks ago made for some great near-term shorting. I caught the opportunity by studying the industry group rather than looking for specific shorts. Could say the same thing about newspaper stocks. DJ aside, most have been in a big slump for a long time, so maybe look for periods of strength to take a short trade?
I have a lot more work to do on shorting but inherently I would have to think that if you can find long trades that make money in various market conditions why can't you do the same with shorts? I am looking for short-term plays as well rather than for weeks or months. As has been my experience with long trades, if it can be done, it's just a process of trial and error until you develop a methodology that generates good trades (in my humble opinion).
Thanks,
JC
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Registered User
Joined: 4/18/2005
Posts: 4,090
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I have had dome nice success with shorting. All of it on the way down from the March 06' highs.
I dont think I could articulate my aproach except that it is candle based. TSV and MS in negative divergences and probably a short term down trend at least is if not leading price down is a forite for me.
I haven't had sucess consistantly shorting since then. I'd wait till there was a clear lower high in the mjor indexes.
And Tobydad is right on with his coment no gettign out early. I set target limits fairly shy of where I thought price would fall to. Moved the stop up daily and kept them tight.
shorting is harder.
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Registered User
Joined: 9/21/2005
Posts: 566
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Take a look at ulitiy sector. Looks weak and getting weaker. Now if I was going to look for some short candidates this is where I would be looking. Similar to reits of a few weeks back. Will be interesting to see how it plays out.
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