I'm relatively new at this, so I could be the stupid one here, but here goes.
I trade online w/ Fidelity and lately I've wanted to try shorting some stocks. Fidelity is nice enough to let you set trailing stop losses for your trades EXCEPT for short sells, as it turns out. So I called up fidelity and inquired as to why this was so and the representative didn't even know this wasn't possible and had to go talk to someone higher up. He came back and said he was told that Fidelity didn't see the point in allowing people to do this since if you're shorting the stock you should be expecting the price to go down, not up and the trailing stop loss only comes into play if the price goes up. He also mentioned something about where to start the zero tick, which I didn't understand.
Now is it just me or does that seem like a really stupid reason to not allow it? Just because you short a stock doesn't mean you're expecting the price to instantaneously go down and this would allow you to get a better initial price for the shares. I mean really, selling short is no different than selling a stock you actually bought, so it seems logical to me that if they allow for trailing stop losses on stocks you own that you're selling they ought to allow it on short sales.
In my case, the reason I want to use the trailing stop loss on a short sail is because when I have a strong conviction that a stock is going down very soon I like it even more when the stock actually is on an upwards burst w/ a bit of momentum so that I can turn that into profit when I buy back the shares later at what they're really worth.
So, am I stupid or is Fidelity? Or I suppose are both of us stupid?
- Chad
I trade online w/ Fidelity and lately I've wanted to try shorting some stocks. Fidelity is nice enough to let you set trailing stop losses for your trades EXCEPT for short sells, as it turns out. So I called up fidelity and inquired as to why this was so and the representative didn't even know this wasn't possible and had to go talk to someone higher up. He came back and said he was told that Fidelity didn't see the point in allowing people to do this since if you're shorting the stock you should be expecting the price to go down, not up and the trailing stop loss only comes into play if the price goes up. He also mentioned something about where to start the zero tick, which I didn't understand.
Now is it just me or does that seem like a really stupid reason to not allow it? Just because you short a stock doesn't mean you're expecting the price to instantaneously go down and this would allow you to get a better initial price for the shares. I mean really, selling short is no different than selling a stock you actually bought, so it seems logical to me that if they allow for trailing stop losses on stocks you own that you're selling they ought to allow it on short sales.
In my case, the reason I want to use the trailing stop loss on a short sail is because when I have a strong conviction that a stock is going down very soon I like it even more when the stock actually is on an upwards burst w/ a bit of momentum so that I can turn that into profit when I buy back the shares later at what they're really worth.
So, am I stupid or is Fidelity? Or I suppose are both of us stupid?
- Chad
. Heh, at least my hopes were dashed, most probably don't care...
.