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Thank you Yuki, for sharing your views with us. i always enjoy reading your
posts :-) While this topic is a little off topic it is interesting, I have
little opportunity to hear from, or talk to, real traders and would love to
hear more on special treatment of Short trades.
What do you think about trading shorts in RealTime/Intraday? It seems that
if we reduce the trade duration to the intraday level (minutes to hours, no
overnite holds) and we are watching the trade in real time, that there is
little risk in going short. Also some of the ETFs appear quite safe. Do you
also trade Intraday?
Theoretically i feel that if my timing is correct I should be able to
reverse each trade, however i don't stick to that... i enter on signals but
exit before my exit signal most of the time (never capturing the entire
price move). This for two reasons: 1) I hate losing even small profits 2) it
gives me more time to enter/modify/transmit order lines. btw, i don't trade
stocks <$5.
thanks Yuki,
herman.
-----Original Message-----
From: Yuki Taga [mailto:yukitaga@xxxxxxxxxxxxx]
Sent: Thursday, September 23, 2004 9:08 PM
To: Kerry Sorenson
Subject: Re: [amibroker] Can not short sell stocks under $5.
Hi Kerry,
Friday, September 24, 2004, 8:51:45 AM, you wrote:
KS> I just ran into this issue with the DAL signal on the Solution
KS> Service. I attempted to enter a short sale and got the above
KS> message. Apparently short selling is not allowed by my broker
KS> for a stock whose last price was $3.57. Does someone with more
KS> experience than me know if this $5 rule is the norm and generally
KS> applied by brokers? I use optionsXpress. Kerry
It's not common in Japan (this place is still kind of the wild, wild
west of investing, in many ways), but I've heard it's common in the
US.
Personally, I would need a fantastic reason to short a stock that
low, probably bordering on inside information that the company is
headed for bankruptcy.
Many people have the idea that shorting is simply the reverse of
going long. It is not. It is a more difficult way to try and
extract money from the market, and the trades will need to be
shepherded differently than the way long trades are managed.
I used to do it a lot, and I'm a *very* good trader, but I hardly
mess with it anymore. Notice I didn't say "never", because there are
always exceptions. But my focus is on ignoring most shorting
"opportunities".
As for Delta . . . it's huge. Do you suppose that it is going to
vanish, or its stock become worthless? Do you have some idea of what
the intrinsic value of the stock is? Sure, it's on a long down
trend, but where was your short order when the stock was still in
double digits? You want to jump on a DAL short *here*??? The market
gets one whiff of good news regarding oil, or a Delta labor
concession, and you are looking at a THIRTY PERCENT GAIN in that
stock, as it tests its 50-day @ around 4.50. Or how about its summer
highs, at around 7 dollars. You want to *short* this???
I'd put my money on red or black, first. ^^_^^
If nothing else, IMO, you want to wait for a rally in this stock, and
short it if and when the rally rolls over. Otherwise, you are
shorting a stock that is scraping along a fairly well defined bottom,
otherwise known as a base, which has persisted for 7 or 8 weeks now.
You know something we don't know? ^_-
I could be wrong of course, but my bet is you will need to be both
very lucky and extremely agile. Good luck in any case. Beware,
there will be quarterly window dressing next week . . .
Best,
Yuki
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