Quote from billpritjr:
Anybody like to short sell out there?
Wanted to stir up discussion on why, what, when, you decide to short sell.
I personally am a trend follower and will go long and short whenever the trend dictates, I dont prefer one or the other.
The shorts seem to become profitable quicker, possibly because people head to the exits faster than when people are investing/buying long.
anyway, wanted to get a new thread going
see ya
BillpritjrREMOVE@yahoo.com
like you and anyone who calls him/herself a trader, i go long and short as the market tells me to. going long and short, however, is not the same, as you mention. i trade intraday volitility breakouts in the nasdaq 100, and I'll give you a little taste of what i've experienced so far doing both (sorry i know this is a shorting topic, but i couldn't resist)....
longs come in many flavors. entries are most definitely easier b/c of the uptick rule. entries tend to be better for me when hitting the offer sitting right on the moving average (i use a 34ema on 1-min an 5-min charts) after the resistence has been broken. however, sometimes you can miss the initial wave by using this technique -- my choice, right now, is less risk and possibly missing that first wave. Lately, and in this type of market, this will almost always be the best entry. I suppose its because of the momentum being not as strong as it used to be. This is a great example of how you must adapt to the current market, or suffer a drawdown in your capital. your choice. exits are typically much easier as well as there is always a bucket full of posers buying into an old uptrend (can't miss the move!). you will always retest the prior resistence before heading lower. once the resistence holds, this is the time to sell, after a quick check with the NDX. as the professionals come out, lots of posers are stuck with a bigger bag than any of them want, and down falls the stock. ironically, alot of beginners and dot.com traders, on quite the occasion in the past 2 months, <insert sarcasm> have made money because of the buy&hold days we've had. this has turned out to be quite a strategy.
shorts are tricky, but once you learn them its just another deal. i've been noticing that the uptick rule hasn't been effecting me as much lately, and i think i might know why. many programs are now creating their own upticks (its another option like "bullets", or married puts), as a way to avoid the uptick rule. this, in turn, causes the market to pretty much free itself of this problem, allowing traders to easily find an uptick to short at least until the posers catch on (usually 1-5 cents away from the entry). after that, if its gonna break, see ya at the next stop buddy. everybody who bought with hope has their stock and the bids dry up. luckily, many shorts offer a roundtrip experience on the initial squeze. I suppose if you're good enough, you can try to get the initial down move, the squeeze, and then be short for the 2nd wave. i'm not this talented yet. but much more profit to be earned on a short, i must say. anyhoo, back to my entries on shorts...i like to also get confirmation from the NDX, as shorts tend to richocet hard when they are false breakouts, with the upside tendancies of the crowd. once it breaks though, its all the tape. i am good enough to see the squeeze now, and its all about volume. after its dropped in the first wave you can literally forget the actual price and focus on the volume. get a volume indicator or watch the prints. if you see volume die, take the price action with a grain of salt. i don't get worried until i see volume come in. then you can refocus on the price. very rarely will you have a 'V' bottom, so even if you're not gonna get the 2nd wave, you still have the freefall back down as all the posers watch their 'i covered too quickly missed profits'. if the market reverses or has no momentum, as soon as the price stops, cover. bids will quickly eliminate many of your hard earned profits. if you're getting the 2nd wave, well, its here we go all over again, except you see, the market has weeded out a bunch of newbies on the first wave who were too scared now to get back into a trade (that was a market conspiracy against them), and you don't get as much of a squeeze now. same for 3rd wave if you get there. it will become flatter and flatter. the NDX will usually clear the 1-min 34ema to the upside before any action occurs in the stock i'm in. or the stock's price itself will form a few bars to the upside of its 1-min 34ema. this is after a good downtrend with 2 or 3 waves...either way, its usually plenty of time to cover. by this time, the falling knife has slashed itself across its participants and the bulls are nowhere to be found. so exits are easier than longs in that sense.
my .0199 cents worth
RS