Its 2000 all over again

HolyGrail · Jul 20, 2006

Quote from myminitrading:

Correct me if im wrong but haven't most of the trading blow ups by professionals been when they were short and kept cost averaging their position. I know thats what happened to Victor Neiderhoffer, I think he only trades from the long side now.

Yes you are wrong. It doesn't matter what happened to anyone. There is no difference in risk. None.

mizer · Jul 20, 2006

Quote from myminitrading:

Thats an exaggeration. I could not think of anything else I would rather do, I LOVE MY JOB, its not even work its pure enjoyment.

You may very well "LOVE YOUR JOB" But I can tell you dont know how to make money at it:eek:

myminitrading · Jul 20, 2006

Quote from HolyGrail:

Yes you are wrong. It doesn't matter what happened to anyone. There is no difference in risk. None.

Hey I can see I am wasting my time, what was I thinking, these pros here on ET know what their doing, they have stone cold discipline, and have know emotions, and certainly know egos.

myminitrading · Jul 20, 2006

Quote from mizer:

You may very well "LOVE YOUR JOB" But I can tell you dont know how to make money at it:eek:

Perhaps you can show me how.

HolyGrail · Jul 20, 2006

Quote from myminitrading:

Hey I can see I am wasting my time, what was I thinking, these pros here on ET know what their doing, they have stone cold discipline, and have know emotions, and certainly know egos.

Well why don't you explain why there is a difference.

If I am going long on a stock and I decide that I am willing to risk 2.00 per share downside before I will get out, how is it different than me going short on a stock risking 2.00 per share upside?

fickletrader · Jul 20, 2006

Going short is less favorable due to a reverse compounding effect. As the position moves in your favor, the capitalization of your position decreases, making it harder and harder to generate each unit of return. The opposite is true when going long.

HolyGrail · Jul 20, 2006

Quote from fickletrader:

Going short is less favorable due to a reverse compounding effect. As the position moves in your favor, the capitalization of your position decreases, making it harder and harder to generate each unit of return. The opposite is true when going long.

LMAO, now that was funny unless of course you are serious. Then it would be sad.

fickletrader · Jul 20, 2006

Consider taking a $10k position from the long side versus the short side, with $2k profit milestones.

LONG:
$10k -> $12k = 20%
$12k -> $14k = 17%

SHORT:
$10k -> $8k = 20%
$8k -> $6k = 25%

So how is this funny?

brownsfan019 · Jul 20, 2006

Quote from fickletrader:

Going short is less favorable due to a reverse compounding effect. As the position moves in your favor, the capitalization of your position decreases, making it harder and harder to generate each unit of return. The opposite is true when going long.

I agree with Grail - good joke!

brownsfan019 · Jul 20, 2006

Quote from myminitrading:

Correct me if im wrong but haven't most of the trading blow ups by professionals been when they were short and kept cost averaging their position. I know thats what happened to Victor Neiderhoffer, I think he only trades from the long side now.

Mini - I am sure we could find many of pro's that have blown up accounts going long as well. I don't see the reasoning here.

It's like another poster said - if you are willing to risk 2 points on a long, why not risk 2 points on a short as well? The amount of being risked is IDENTICAL.