3SOF

I am typically a long term investor in longs, and I'd be interested finding stocks that I can short for a long period of time (i.e. 3 months up) since it's in distribution pattern.

Can't poll any of the options but would like to experiment provided it does not mess up my tax fillings

Hi

I am definitely interested in learning how to short. I have often wanted to learn, but just never

looked into it. Will watch and learn and may be take the plunge once in a while.

Lalitha

Shorting stocks is the more practical way to keep your account green. These markets are trending to the down side.

The only other choice I see are the commodity markets.

David:

Use any method of making money that you believe will work.

If you short - we will have another option available to us.  I would not do it often. 
I would set up a small account just for the purpose. 
Tax advantage type accounts will probably not allow shorting.

Hit and run works for me - I like it.

Time flys

Shorting will unfortunately be a minor activity for me but I can understand those that don't have a problem with it, will be able to benefit. Its just what I have observed in the 3 months I have been aboard, and I'm am sure opinions will vary but what I noticed is a scattered approach to what this site is about. For example, "Stocks on demand", lasted about 3 hours, S&P futures analysis, lasted a couple of days, three pennies on fire was added and now this. David, you have expressed on different occasions how over loaded you have been (IE not spending time with your child) and I just wonder where things will end up. I know the first comments coming back to me from those interested in shorting will be "We are here to make money", and I do agree. We all have different risk tolerances, different portfolio objectives and different philosophies so ultimately as with any company and 3sof is a company, the company will reflect the owner(David). Things are at a very flexible stagein the company, some people will be won  over and some won't. What I saw here at this site initially was momentum investing, combined with wealth preservation. David I was very excited about the fact that I was following someone who was 75% cash, it instilled comfort and confidence for me when things were starting to look uncertain in the market. Now whats my point. One, I hope the community maintains the quality members it initially had and second, I hope that David, your resources are not stretched to thin. I don't want this to sound too harsh but I have paid my membership and now realize that I do not exactly know what I have paid for. I know you are trying to act in the best interests of the majority but make sure it is what you want, then the quality should come through.

Good Trading All!

FWIW-
Been away for a few days and I come back to this very excellent news! I must say that I felt all along that we would inevitably get to this point because a good and successful trader uses ALL the tools that are available and takes what the market will give him/her. This is a very uncertain market for sure, neither bull nor bear, but certainly heavily leaning towards bear and one of the strong attributes of this type of market is failed breakouts. Traders are uncertain of the direction of the market so they are much quicker to take profits. Thus David's hit and run idea makes perfect sense.
  As someone who has shorted many stocks over the years, I think I can offer a few answers to some of your questions.
1) If you're broker does NOT allow you to short stocks, he is short-changing you. (No pun intended) and you really do need to change brokers. Otherwise, in this type of a market you will find yourself either sitting on the sidelines or worse, forcing trades that are really not there.
2)There is no great mystery to shorting stocks and you should'nt make more of it than it really is. My dear friend and mentor James J. O'Toole (Himself) always told me to keep it simple. Shorting is EXACTLY like buying a stock, but you do everything in REVERSE and he's right, it is really that simple.
3) Staying on the reverse theme, for those of you who use filters, the same thing applies. Instead of looking for support , you're looking for resistance and so forth.
4) There are NO extra special tax implications.
5) Trading options-- Now here is a statistic that for some strange reason, most traders. let alone options traders, do not know but I assure you it is true. ALMOST 70% OF ALL OPTIONS EXPIRE WORTHLESS. To me I don't find those type of odds appealing in the least.
6) Someone mentioned commodities and I can tell you from experience that unless you have a  VERY high tolerance for volatility and unless you also are well bankrolled and have a VERY high tolerance for the possibility of some heavy losses, you do not want to play commodities.
Anyway, I hope some of this helps and I look for ward to watching 3SOF getting into this part of the game. Leaving next week for a week or so in Ireland and in the meantime I wish you ALL only the very best.
Irish

Two other quick points as regards to some of the posts on this thread.  Just because you have a margin account ( Which normally means you have the necessary $ in your account that your broker mandates) does not mean that you have to trade ON MARGIN. These are 2 totally different things. Also, someone mentioned shorting OTC stocks. Not a good idea. Ever.
All the best.
Irish

In principle I am in favour, having never shorted (and being with a broker that doesn't allow me to) I'd be interested to learn, and perhaps follow some once I've changed my broker.

However, if this were to happen, it is imperative that the shorts board be separate (with separate cash) from the regular 3SOF board, and that 3SOF remain the priority.  I think that most investors here are swing and value investors, looking for short to medium term trades, and at present the 3SOF board is the most inclusive and profitable board here (well with the exception of EliteG's infinite compound, but I doubt anyone could keep up with Elite ).  Pennys are too volatile or many, and I for one can't trade most of them, and short trades may also exclude others who's acounts or investing philosophies prohibit them from trading them.

I think you will find that most people will be very happy to follow these and learn from them even if they don't trade them, just as long as the 3SOF main board continues to produce good picks with (hopefully) solid returns - lets just hope this doesn't start becoming too difficult 

My goodness I find I have a lot to say about this subject. As a 35yr professional in the securities business I see the need for extreme caution should you go down this road. The subscription rate for your service is at a level, which is good, where many of your subscribers are building their investment knowledge on the buy side. The sell side of this market place requires a high level of DD on the fundamental side, not just TA. Risk is not finite on the sell side. I believe that your seasoned subscribers already have established guidelines related to their short sales. I would never allow an unsophisticated client to short a stock and many regulators place such a high bar related to" know your client" rules that many firms place very strong requirements for approval. There is a reason for this and your seasoned traders know I'm right. Your desire to provide profit opportunities is understandable but will you be able to educate your base related to risk to your satisfaction. I could say tell them to buy puts when they think they want to be on the sell side. They would only risk their premium and that is exactly what probably would happen. You started as a forum for traders to discuss trading ideas. Therefore,a discussion of short sales is appropriate. Let the members discuss everything they're doing in the market. Those who choose to follow along will. In my opinion your public portfolio should stay on the long side. Go back and read some of these threads, many of your subscribers are learning good tools related to the buy side. But are they ready for the risks on the sell side? David I agree with a point made early. This market is very difficult right now. More may not be better. Your followers will still be here if your 10% or 100% invested, guide them through these tough markets with your original plan. For those who want to learn go to a serious investment advisor. Learn how the account works, listen to his professional opinion related to your profile and risk tolerance. Be carefull

1reilly is spot on with his words of caution on shorting, and he talks from professional experiance. You must have a trade plan on the long side (entry / exit conditions) and it is even more important to have strict trade plans for the short side. Stocks take volume to make real breakouts to the up, but can fall on their own weight with little or no volume heavily to the down side. As many here have not shorted before and are interested I'll show my thoughts on VPHM. I posted on the VPHM members thread http://www.3stocksonfire.org/trading/index.php?topic=3062.0 on Oct 9th that I saw VPHM as a short. Now the best short candidates are those that have been performing hugely almost in defiance of the market / everything around them, VPHM fits that. Combine it with a negative sentiment brewing in the market and you have the right type of candidate for shorting. Think of TZOO and TASR from 2005 from Hero's to Zero's as it were. Look at my chart, the correct short entry was the failure at the middle bollinger band which was around $19, immediately on shorting the stock I would have entered a buy to cover stop order at something like $20.40, so my risk was then known being $1.40 per share. My exit target to the downside would be just around the lower bollinger band around $17, so I would either be buying to cover right now or waching to give it more room to play out. Also by now I would have moved my protective buy to cover stop order to my original entry point, so my risk is now minimal (well, bar slippage and gap up's). For 100% sure I would cover before the 50sma at $16.50 as probably every trader who has heard of VPHM will have their buy orders lingering around there. In terms of indicators on the VPHM chart I used MACD histogram to show me breakdown was in process and also weekly chart down daily chart up confirmed a short sell possibility.
So in essence that is a short sell trading plan on VPHM, now I didn't execute this plan as I had lingering doubts regarding Piper Jaffrey and their sort of invisible hand guidance of this stock to the upside (well i should have trusted my own analysis as it turns out, but what the hey!).
Finally VPHM earnings are out in a couple of weeks so again I would cover before then and conversly probably be looking for a long bounce play around the 50sma on earnings rumours.
Hope this was useful.

Never shorted before, but never traded before until this year.  Would love to try it a few times.  No low floats IMHO, they can skyrocket both ways, and I would not want to be short a low float with a juicy PR, nor would I want to be long a low float with a bad news pr.


oic 

I see no reason why your technical stock picking techniques would not be as profitable on the short side as it has been on the long side. You have provided us with a stop loss and a profit target on long trades, and this would be even more important on the short side.

I Hope you will limit short trades to a nominal percentage of the portfolio, say 25%. I try to do my  trading in a tax advantaged account, which will not allow short sales. No problem with a position in cash, as capital preservation is paramount! Better no trade then one you have doubts about.

Remember your broker must be able to borrow the shares for you to sell them short. Naked short sales are limited to the hedge funds and investment houses.  When following a momentum stock down, your broker may not be able to borrow shares for you to short, so your order will not be filled.

just aquick posting question.
how do you get the chart to fit the post without having to scroll?
anyone ?
thanks
maxi

Quote from: rickjust on October 12, 2005, 11:27:34 PM
just aquick posting question.
how do you get the chart to fit the post without having to scroll?
anyone ?
thanks
maxi

just trial and error maxi.. you gotta size your chart until it fits right    thats what I do.

Shorting is fun guys.. there is risk in everything market related and I think we are making it look a bit too dark.  The risk in shorting I look out for is not shorting a stock with something new about to come out(new drugs, new technolgy, new product..etc)  You get chance of less "new" the higher priced and older a stock gets.  I also look for a "higher" float" and I dont want too many people short(a low short %)
check: http://www.shortsqueeze.com/index.php?symbol=UNTD&submit=Enter

Haven't done enough DD but I may have a good quick shorty in UNTD with just around a 2:1 reward/risk ratio.  Bout 10% target.  5.91% float short and 61 million float.  Just watching it.