Long Vs Short
- Thread starter John9999
- Start date
- You have to be quick short - no hesitation.
- You have more time to go long.
You're right John as far as stock markets go anyway. But there's the reason also why so many long-only "investors" lose money - they see the prices of the stocks they're married to rise week after week. Then they read the Monday bulletin from their broker and realise that the last week wiped out the last 2 months of gains, they panic and they sell. Mostly, they buy as if they're investors and sell as if they're traders.
Neither.
It certainly isn't just you, partly for the reasons mentioned above, but equally certainly it's by no means universally true, because indices tend, overall, to rise, and for that reason the longer one's trade durations are, the more likely one is to do better overall from long-side trades than from shorts.
Equities, and Equity Indexes are MUCH easier to trade from the long side.
Bottoms in most markets are easier to pick than tops.
Not saying money can't be made from the short side, just a bit harder because Equities go up more often than they go down.
If I were new, I would focus on the long side (buying dips in STRONG uptrends)****
Bottoms in most markets are easier to pick than tops.
Not saying money can't be made from the short side, just a bit harder because Equities go up more often than they go down.
If I were new, I would focus on the long side (buying dips in STRONG uptrends)****
In addition...
Anybody who can exert force on market psychology tries to make the market go up. Makes it much more difficult to profit from the short side. Markets are quick to buy the dip, but slow to spit the bit. Bill O'Neill (IBD) once said. "I made money on the short side only twice in my career".
If you're a disciplined technical trader you can make money on shorts, of course, but IMV it's more difficult. (See here... I'm admitting that I have a long-side bias in my trading... as I should... because the market itself has a long-side bias.)
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markets fall faster than they rise
I pretty much agree with all of the above. I will add this. Most stock traders only go long and many protect with some form of stoploss order. So when the markets go south they hit the stops and possibly some sell programs. This makes them fall faster then most moves to the long side. It's also the reason that the bounce at the end of a long rapid move to the downside is so pronounced.
I think it's well documented that down moves tend to be faster and larger as a cohesive, singular move; but it's a reward centric view of the market and fails to capture that smaller up moves are more frequent. Especially recently where we've had a good run of new 52 week highs outpacing new 52 lows. In that environment, long had been pretty easy just buying and building into breakouts. They rise with the tide, and hold when it retreats...when they don't you exit or scale down.