Is shorting a dead end street?

Quote from oraclewizard77:

Thanks, I may stop trying to counter trend trade for awhile, since I got hurt doing that yesterday mainly by not having a hard stop set which would have limited the losses.
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Wow. That is just a recipe for complete disaster. You just broke the two most important rules in trading:

1. ALWAYS have a stop. ALWAYS ALWAYS ALWAYS ALWAYS ALWAYS. Hard stops are good in case of disaster or in fast moving markets, but at the very least you need a mental stop that always works.

2. Do not trade counter-trend.

Those are the first two rules I would write at the top of any trading plan.

The #1 difference between winning traders and losing traders is that losing traders can't stop themselves from the temptation of trying to pick tops and bottoms. Winning traders have been burned enough to know that over time, picking tops and bottoms is absolutely a losing game. You can get it a few times, but all the times that you're wrong outweigh the few times that you're right. It's a solid formula for losing money.

Only the very best can trade counter-trend (especially on the short time frames), and even then, what's the point? You don't make as much money as following the trend, it's harder, and much more dangerous. What's worse, when you get stopped out price has already run far in the direction of the trend and now you can't even get in on that move. There are literally no benefits other than the psychological rush that new traders get when they get lucky and catch the bottom or top one time in 5.
 
Quote from Palatine:

Every active participant noticed that the markets have become harder to (swing) short. It is not necessarily that the original poster was acting against the tape. Perhaps he has simply reacted on a larger downmove and expected this swing to last a little longer than the morning session.
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I believe he said that he got squeezed, which implies that he shorted in July and held it through a massive up move. That's the way I read it.
 
Draw a trendline on the weekly chart of the S&P 500. If the line slopes down you should be short. If it is sloped up you should be long. Right now it is up. You should be long.

If you don't know how to draw a trendline see Victor Sperandeo book "Methods of a Wall Street Master."

Never short a stock because you think it is too high.

A rising tide lifts all boats, even leaky ones.
 
Quote from jr07:

Ive been squeezed to death since early July, since then I have been trying to catch a decent run on the short side, and have been always wrong

This week and more so today, It did seem like the time finally might come. And yet everyday at 3:30pm the market is run up

Can we expect to continue seeing this market behaviour in the future?

Has shorting died? As an opportunity to profit?

J
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One of my systems fades a trend 50%+ of time and profitable.
 
<cite>Is shorting a dead end street? </cite>



It is more difficult to make money on the short side, particularly if you are daytrader.

Obviously, what happened when the market went from 14k to under 7k was a once in a lifetime event.

The problem for the daytrader is that much of the distance down is usually more volatile and happens much quicker in time.

The daytrader is in a postion in which he cannot fully participate in the downside because a lot of distance in a down market is covered in gap downs on the open. If a stock is down a dollar and a half for the day, and it opened down 85 cents, you missed more than half of that profit from going short.

As a daytrader, do not necessarily look to go "all" short or "all" long.

I have stocks that I only look to short into strength because I have the research to indicate that the stocks will not only retrace, but do so in a fairly predictable manner.

There is NO profit in being a "momentum" player who is fighting the tape.

The paradox for the daytrader is to not fight the "tape" of the entire market, but if you are going to fight the tape, fight the tape of an individual stock.

That is to say that shorting the intraday tops of ascending stocks and buying the intraday bottoms of descending stocks is not althogether a bad strategy.

Of course, much money will be lost if the stocks you longed spend their days going down in a 45 degree angle and end at their daily lows, and if the stocks you shorted go up on a 45 degree angle and end at their intraday highs. Of course, that is why research is essential, to insure that such patterns on the stocks that you choose to trade are quite rare.
 
Quote from jr07:

Ive been squeezed to death since early July, since then I have been trying to catch a decent run on the short side, and have been always wrong

This week and more so today, It did seem like the time finally might come. And yet everyday at 3:30pm the market is run up

Can we expect to continue seeing this market behaviour in the future?

Has shorting died? As an opportunity to profit?

J
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Just wanted to make a suggestion. I keep a portfolio of both longs and shorts. So far, knock on keyboard, both sides have been doing ok. I don't day trade in the traditional sense and do better when I'm not watching the market. I usually make my decisions after the market closes.

I'm all for trading with the trend but just because the overall market is trending upward doesn't mean all stocks are trending upward. If you see a stock that is trending opposite of the market, follow that downward trend and short it.

I don't get the maximum profit by holding both sides, but when the market is down on those occasional drops I'm usually ok.

Not sure if you know this, but don't short something that runs opposite the market.

(i.e. If the market goes up because the dollar goes down, don't short the dollar. If the market tanks because the dollar went up, then you lost money on both sides.

Get something that is totally different. Something better would be for example going long on tech stocks and seeing that biotech, education, insurance were going down during that time.)
 
Quote from jr07:

Ive been squeezed to death since early July, since then I have been trying to catch a decent run on the short side, and have been always wrong

This week and more so today, It did seem like the time finally might come. And yet everyday at 3:30pm the market is run up

Can we expect to continue seeing this market behaviour in the future?

Has shorting died? As an opportunity to profit?

J
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Why are you trying to short? Are you some contrarian daytrader?
 
Quote from dozu888:

no... shorting has no future.

do not sell america short.
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Are you serious? Then how do you explain that US market is always lower after the close and it turns green thanks to Asia and mostly Europe?
 
Market may drift down after close since day traders need to be out end of day and will take their loss at high of day.

Quote from gkishot:

Are you serious? Then how do you explain that US market is always lower after the close and it turns green thanks to Asia and mostly Europe?
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