Considering short positions

[David Randolph]

Hello 3 SOF Honours Members !

It's getting harder and harder to pick stocks that will rise strongly over the short term. Most breakouts end being fake. Most stocks are turning bearish. So I'm thinking, to keep the performance up, of considering some trades on the short side (it looks like there are many opportunities out there).

Or else I will embrace a hit and run strategy, looking for quick but small gains. Letting the profits run generally doesn't work on a bear market, not on the long side of the market.

Please give your feedback on this subject, either by voting on this poll or by writing some comments.

Thank you !

[fous]

I'd really enjoy to see your strat on shorting stocks if you were to do so. I've always wanted to try shorting but im still trying to get the hang of going long so im sticking to that as of now. I think this would be a great idea and a valuable lesson for everyone here at 3SOF. Now seems like a good time to try it, stocks seem to always go down when you want them to go up  .

Good luck David,

fousc

[la-onda]

nice idea, but with my broker I will be not able to short stocks

[robt]

The way the market is turning, I think the only alternative to shorting is getting out of the market; "hit and run" trades have too much overhead.

But if you go that route, a lot of people, like fousc, will be first-timers...Probably would be best to be conservative with shorts, at least to start.

[Gu$tavo]

I  always try to be short in 2  or 3 stocks.. right now TOL and GM (-18 and -20 %). this week I should be covering this,  so I'm looking for another one since 2/3 weeeks ago, ...  Is not as easy ..when I'll get it I'll let you know...

[RJ]

David,
The poll leaves out one equation...."Have you ever shorted a stock?"...I have bought puts (lost my buttocks and adjoining cheeks... )...I would like to see a planned short and observe the process. It involves margin if I am correct which is something that you are against (?). Please correct me if I am wrong.....but none the less, I think it would be a great learning experience even if I am watching from the sidelines..... ...

Rj

[gri64]

David, thanks for two (!) absolutely necessary ideas.
I vote for the shorting and... for the " hit and run strategy". I think it could be more efficient, more logical and ... more interesting 

Robt, you are quite right - "a lot of people, like fousc, will be first-timers...Probably would be best to be conservative with shorts, at least to start."

Unfortunately many people will not be able to short stocks and especially OTC (penny) stocks.
I see 2 management problems in shorting: broker's rules and account type. So, I hope, experienced members could give us (newbies  ) some recommendations.
For example: main short rules; brokers for OTC shorting (if it possible); how to handle margin account and so on.

Gregory

[David Randolph]

I'd really enjoy to see your strat on shorting stocks if you were to do so. I've always wanted to try shorting but im still trying to get the hang of going long so im sticking to that as of now. I think this would be a great idea and a valuable lesson for everyone here at 3SOF. Now seems like a good time to try it, stocks seem to always go down when you want them to go up .

Good luck David,

fousc

Thanks for your feedback fousc, I also believe it would be a valuable learning experience.

nice idea, but with my broker I will be not able to short stocks

That seems to be a problem for some of our users, maybe half of them? Specially if your broker is European, they usually don't let a man short stocks ... (my European broker doesn't let me either). Probably only US based margin accounts are illegible to short stocks.

This is why the US markets are the most liquid and alive in the world, during good and bad times. It allows for professionals to make profits on Bear Markets too. Europeans and Asians should learn from the US, where even in the 1800's you could already short stocks.

A speculator needs to be free and available to profit from up and down moves. It improves his objectivity, not sticking to just one side of the market.

Even Livermore, in Reminiscences of a Stock Operator, a book from 1923, said:

«There's no bull or bear side of the market, just the right side».

I believe anyone who has a broker that doesn't let him short stocks should change broker (having the right broker and right commissions is much more important to success in trading than most people think).

The way the market is turning, I think the only alternative to shorting is getting out of the market; "hit and run" trades have too much overhead.

But if you go that route, a lot of people, like fousc, will be first-timers...Probably would be best to be conservative with shorts, at least to start.

I totally agree robt.

I  always try to be short in 2  or 3 stocks.. right now TOL and GM (-18 and -20 %). this week I should be covering this,  so I'm looking for another one since 2/3 weeeks ago, ...  Is not as easy ..when I'll get it I'll let you know...

Thanks Gu$tavo, please post your short picks on the Members Board (by the way, we're in the process of organizing a better way for the 3 SOF Honours Members to exchange their stock picks)

David,
The poll leaves out one equation...."Have you ever shorted a stock?"...I have bought puts (lost my buttocks and adjoining cheeks... )...I would like to see a planned short and observe the process. It involves margin if I am correct which is something that you are against (?). Please correct me if I am wrong.....but none the less, I think it would be a great learning experience even if I am watching from the sidelines..... ...

Rj

Puts and calls are a losers game for the ones who buy them. It's the sellers who win long term. Trading them is much more dangerous than shorting stocks and I definitely recommend everyone to avoid those exotic financial products (I've seen many people go bankrupt and into debt because of puts and calls).

Shorting stocks doesn't involve trading on margin, but one needs a margin account to do it (it allows trading on margin, but you don't have to do it, just if you want).

That's the spirit, it would be a valuable learning experience. Even if one doesn't want to go short, he could learn some selling strategies ...

Thanks for your feedback, let's wait for more comments 

[keepsavi]

I have contemplated selling stocks short on numerous occasions but it was my perception that it would tie up more of my capital in a margin account therefore taking away from the percentage of my capital that I could have invested in the market on a given day.

please correct me if Im wrong

[RJ]

That's the spirit, it would be a valuable learning experience. Even if one doesn't want to go short, he could learn some selling strategies ...

David,

One of the reasons I am "home" is the fact that even when you are (less educated in speculation) you are still the gentleman....thank you for that....

RJ

[rickjust]

hi david,
i have never shorted but would love to try it . i watched dlb (dolby) go from 24 to 15 in two months following an even swing trading pattern but never risked trying it even though my gut feeling that this was a crap stock ( great company though , it has been around for 40 years and is used in all audio equipment and cinemas etc. you know that little dolby button on your cassette player?)
also watched a bunch of retail stocks reach their peaks and start to turn around .
so count me in!
maxi

[bw6458]

David - I would love some coaching on shorting... I have had some winners most recently MSO from 29 down to 21 , but more often my idea is right on but the timing is off.  I tried to predict the housing burst with CTX and BZH and took a hit because I had to bail just before they both dropped 30%.

So I think shorting in this market is a great idea,,, just which stocks???

Thanks for all the advise from everyone - this is a great resource to couple with DD

[GQnIQ]

David, glad to see your finally considering the other side of the coin.  I've wacthed the market recently go from a short term decline to an intemediate decline and believe the axiom, the trend is your friend.  I've been waiting for you to initiate some shorts.  I'm all for shorting!  And I'm sure everyone has noticed that stocks often decline faster than making a move up.  If a stock goes from $10 to $5 it's lost 50%.  But to get back to $10 from $5 takes a 100% move!  

I'm also for "hit and runs".  So many times this year stocks make a short move up and the profit taking begins.  So I often take my money and run.  I can always buy in again if warranted.  

Keep up the good work and let's buy the 3 stocks on fire and short the 3 stocks tanking!

For those that cannot short due to their broker my suggestion is......CHANGE BROKERS!!!!!!  And for those inexperienced in shorting, watch, learn, and then take the plunge! (Pun intended).

[aix]

I'd like to get some shorting experience. I have never tried it before.

David, could you provide a tutorial on shorting somewhere on the site?

Count me in.

Keep up the good work!

[netfishmademerich]

"Trade with the trend"  I would love to see some short positions on this awesome site.